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By:NatalieSpangenberg,NJCULMarketingandCommunicationsSpecialist

Upon writing this, the Governmental Affairs Conference (GAC) was in full swing in Washington D.C., and it brought to mind how often professionals work outside of their physical offices. Whether you are at a conference, convention or just working from home, you can find yourself sitting in your home office, a Starbucks café, or even a random conference room—as long as it has WiFi.

By:NatalieSpangenberg,NJCULMarketingandCommunicationsSpecialist

As we continue on “this thing called life” in 2019, we can sometimes hit a point in time where we feel unmotivated or uninspired to continue on with the New Year’s resolutions we set back in January. Although it’s important to just focus on the now and what the future may hold, take a moment to reflect on what intentions you set for the New Year and how to accomplish those goals before we welcome 2020 into our lives—believe it or not, it’s coming fast! We’re already gearing up to turn our clocks ahead this weekend for Spring!

It’s not Halloween, but if you like being scared (or in this case, horrified!) the Consumer Financial Protection Bureau (CFPB) recently released a report on financial abuse of older consumers. Since 2013, financial institutions have reported to the federal government over 180,000 suspicious activities targeting older adults, involving a total of more than $6 billion. The reports provide unique data on these suspicious activities, which can enhance ongoing efforts to prevent elder financial exploitation and to punish wrongdoers.

America Saves and Military Saves Week begins on Feb. 25 and runs through March 2. It is an annual opportunity for credit unions to talk to their members about the importance of good savings behavior, as well as a chance for members and their families to assess their own saving status. Visit the America and Military Saves Week Digital Toolkits for materials and resources to help encourage people to take financial action and spread the word about the importance of saving automatically.

By: MarissaAnema, NJCUL Vice President, MarketingandCommunications

As the head of our Emerging Leaders group (as well as an Emerging Leader myself), I’m constantly looking for people, places, things, philosophies, skills, tools, resources, etc., that will help aspiring leaders grow and gain success. Enter Kate Delaney (for whom I cannot take credit for – Yvette found her). She is a powerful and influential, yet practical and humble, leader who is a master communicator (a woman after my own heart) whose mission it is to empower others to find their “wow” factor, communicate it succinctly and passionately, and make an impact.

I recently caught up with Kate to get a taste of her “What’s Your Wow, Clearly, Confidently & Concisely Communicate What Sets You Apart From Everyone Else” presentation at Reality Check, which I am SO looking forward to...

New technology and innovation that aims to compete with traditional financial methods in the delivery of financial services. FinTech is an emerging industry that uses technology to improve activities in finance. The use of smartphones for mobile banking, investing services and cryptocurrency are examples of technologies aiming to make financial services more accessible to the general public. Financial technology companies consist of both startups and established financial institutions and technology companies trying to replace or enhance the usage of financial services provided by existing financial companies. Many existing financial institutions are implementing FinTech solutions and technologies in order to improve and develop their services, as well as gain an improved competitive stance.

I added the bolding for the first and last sentences because they show the crux of the issue – and when viewed together describe our challenge precisely. Will we as established financial institutions be able to co-opt new technologies to enhance our abilities to serve members and compete in our space? Or does FinTech represent our greatest competitive threat?

One company in the credit union space has distinguished itself as the pre-eminent thought leader and investor in FinTech, and that is CUNA Mutual Group, with their investment arm CMFG Ventures, LLC. We’re fortunate to have Brian Kaas, CMFG Venture’s President and Managing Director, as a speaker at this year’s CU Reality Check (February 18-20, 2019, at the Borgata in Atlantic City).

Brian oversees all aspects of CMFG’s venture capital program, and also serves as the vice president of Corporate Development at CUNA Mutual Group. He is responsible for sourcing, evaluating, and executing a broad range of strategic transactions for the organization. Prior to joining CUNA Mutual Group, Brian was a partner at Foley & Lardner and a member of its Insurance & Reinsurance and Health Care Industry teams.

We had a chance to catch up with Brian for a preview of the CU Reality Check presentation…

By: MarissaAnema, NJCUL Vice President, MarketingandCommunications

It’s funny how things appear and recur in your life when you need them the most.

I was pondering my accomplishments and struggles of 2018 leading up to New Year’s Eve, and beginning to map out what I think my 2019 should look like, when an article originally published by NPR in 2015 titled “The Writing Assignment That Changes Lives” serendipitously came up in my Facebook feed.

The objectives of a recent Financial Crimes Enforcement Network (FinCEN) rule that requires financial entities, including credit unions, to verify the identities of true account owners is commendable. Whether the regulation achieves those objectives may be another question.

I was trying to think of what to write about in my blog article when I happened to glance to my right and I saw snow floating down outside my window. For me, normally, a sight that would invoke visions of hot chocolate, a roaring fire, and the upcoming holidays. Unfortunately, what I’m seeing is what the weather professionals have been calling a “winter blizzard”. They might have a point as just beyond the snowflakes at my window I see the New Jersey Turnpike (not a pretty sight on any given day) and the truck lane is backing up quickly as I now realize the flakes are coming down swiftly and the wind is blowing them sideways. After those images quickly impressed themselves on my brain, I thought…I wonder how prepared credit unions are for the upcoming winter season?

While there are still some races in last week’s mid-term elections that have yet to be decided, it’s clear that an unusually large number of new lawmakers will descend on Capitol Hill when the 116th Congress convenes on January 3rd.

In fact, here in New Jersey, we’ll have four new members of our 12-member House delegation. That’s a turnover of one-third of the delegation, and three of those four have never held elective office. That’s a sea change, the likes of which I’m hard-pressed to recall.

All of those new lawmakers will need to be brought up to speed on credit unions and our issues. We have our work cut out for us!

Luckily, we and CULAC supported the winners of the two open-seat races, Congressman-elect Jeff Van Drew (D-2) and Congresswoman-elect Mike Sherrill (D-11). We have already visited with both of them during their campaigns to build our relationship.

With the election of these new lawmakers, grassroots support programs such as lawmaker meetings and Project Zip Code become all the more critical. We’ve scheduled a Hike-the-Hill for December 11 and, together with CUNA, we’re issuing a renewed call for Project Zip Code, asking credit unions who have participated in the past to update their numbers, and those who haven’t participated to get onboard.

Lawmaker meetings are essential part of our 360-degree advocacy program. Being able to illustrate to a lawmaker how many credit union members live in their district is invaluable in those meetings. We’ll never match the bankers’ deep pockets, but they’ll never match our grassroots numbers. In the end, as we saw last week, it’s all about votes, and we have more than a million credit union members in New Jersey alone.

The votes are almost done being counted. Now let’s make sure we count all credit union members.

When it comes to the League’s budget, David often refers jokingly to governmental affairs as a “big black hole.” Quantifying an ROI on governmental advocacy is always a challenge, for any business or organization, so when we do see a measurable return I’m sure you’ll forgive us for tooting our horn.

By: David Frankil, NJCUL President/CEO

The juxtaposition is jarring.

I was sitting at the back of the room on Tuesday morning at our Annual Convention, watching John Hunt present an abbreviated one-hour version of his active shooter training. A certified active shooter instructor and 27-year veteran of the NJ State Police, it is something he has done countless times, but it’s a first for me.

John Hunt and therapy dog Gunther leading Active Shooter training at the League's Convention.

We’re watching a grainy, black-and-white security video re-enactment of the Columbine school shootings, and the only word that comes to mind is horrific. John was careful to remind everyone that it is a movie, with actors – but that doesn’t lessen the impact one bit. Images, words and actions that are indelibly seared into my memory.

Worse was to learn that most of the students that died in the library might have survived, had they run instead of ducking under desks or behind sofas. Or as John teaches, fought back, or barricaded themselves in a room to prevent access by the shooters.

And then to hear of the awful events in Pittsburgh at the Tree of Life Synagogue just a few days later. Eleven dead and numerous injuries among the worshippers and police responders. Our thoughts, prayers and deepest condolences to those who suffered so terribly.

I don’t have the answer to preventing active shooter incidents but do know one thing – we have an obligation to be prepared. If you have not recently provided active shooter response training to everyone at your credit union, please do – and we will be talking with John about providing training to those that need it.

The Federal Trade Commission (FTC) announced Thursday that customers who took out an online payday loan from a company affiliated with AMG Services may be getting a check in the mail from the FTC. The $505 million the FTC is returning to consumers makes this the largest refund program the agency has ever administered.

If your credit union is a private student lender, you may need to take immediate action. Last week, the New Jersey Credit Union League (NJCUL) held a FREE virtual meeting on the July liquidation of the South Dakota-based ReliaMax Surety Company. ReliaMax wrote surety bonds covering student loan repayment to financial Institutions nationwide; including credit unions. The company ceased collection and default services effective Friday, July 27th2018. By way of background, ReliaMax had been placed into liquidation by the South Dakota Division of Insurance (DOI). The South Dakota DOI petitioned the Hughes County Circuit Court on June 12, 2018 to place ReliaMax into liquidation due to insolvency. Judge Patricia J. DeVaney approved the petition on June 27, 2018. ReliaMax distributed communication of the liquidation on July 25, 2018, to insureds, principals, claimants and other interested parties; including all 60+ days past due borrowers and cosigners. Some of whom may be your members.

Almost 50 years ago, concerns about large amounts of cash coming into the country from the drug trade led Congress to pass what’s become known as the Bank Secrecy Act (BSA). The BSA was designed to help identify the source, volume, and movement of currency and other monetary instruments transported or transmitted into or out of the U.S. The Money Laundering Control Act came about in 1986. The training to counter money laundering is more commonly known as Anti-Money Laundering (AML) training.

So, with a little bit of BSA/AML history in mind, back to my original question, why won’t BSA/AML training just go away?

With stories peppering the news like the two I’m sharing here, credit unions, if you have not already addressed your organization’s cybersecurity needs and further, taking the time to create a plan to protect your systems and members’ private information from attacks, such as breaches, malware, hacking, phishing scams, identity theft…I could go on…then you need to gather your senior management and board directors and begin the assessment of the vulnerabilities of your credit union, look to your organization’s cyber-safety (or lack thereof), and work internally, or with verified partners, on a proactive plan of cyber-action!

When it comes to myself, my family, and my friends, safety and security are top priority. And we’re not alone. The Consumer Banking Experience Index survey has consistently found that consumers rank the safety and security of their personal information as their highest priority in the “banking” experience. Couple that with a constant barrage of data breaches, hacks, and identity theft scams happening around the globe, and being featured in the news these days, entrusting your money and financial security to someone else can be daunting. Members want to feel confident that their credit unions are keeping their private information safe and secure. That begins with credit unions looking inward, ensuring their board of directors, supervisory committee, and senior management are placing a strong focus on cybersecurity.

You really have two choices – wait until you suffer a breach, and then scramble to clean up the mess, or be proactive, and make the credit union a hard target for anyone looking in your direction.

Verizon’s 2018 Data Breach Investigations Executive Summary report

So, where does your credit union stand? Are you sitting back and waiting for cyber-hackers to come your way…playing defense? Or, are you ready to take control of your credit union’s cyber-safety and start playing offense?

Cyber-hackers only need one point of entry to exploit a credit union’s vulnerabilities, which are sometimes the simplest of things, i.e. not enforcing complex passwords, not implementing timely security patches to servers and workstations, and failing to conduct timely security training for employees. Credit unions need to ensure that they have up-to-date cybersecurity information, education, and training to prevent these most basic of attacks. And, if a credit union does not have the internal resources to get the job done, they should look to connect with verified third-party partners that best fit their needs and budget.

Recent industry reports show that credit union membership is growing overall, with new members looking for better interest rates, lower fees, and friendlier service than traditional, for-profit banking institutions. Guess what else they are looking for? A safe and sound institution they can entrust with their personal information and money.

You might think cyber-hackers only go after big banks or the largest of credit unions; however, according to Verizon’s 2018 Data Breach Investigations Executive Summary report, the financial industry as a whole ranks in the top five most likely targets of a social engineering breach. Verizon also reports that nearly 60% of breach victims last year were small businesses — a category into which credit unions certainly fall. Verizon also indicates the motivation behind 76% of the attacks it investigated last year was to steal money or inflict financial damage, an outcome that poses obvious pitfalls for credit unions, in particular. The pressure is on to show that you are taking the steps to properly safeguard members’ information just as effectively as the big banks do for their customers.

Going beyond the basic attacks, recent studies show many organizations are underprepared for the surge in new and sophisticated malware attacks. These are far more sophisticated than stealing a password, and many credit unions may find their in-house teams unequipped to take on preventative measures in-house or find those measures too complex to tackle without help.

This is a lot for credit unions to deal with on their own, and I haven’t even begun to discuss the National Credit Union Administration’s (NCUA) imminent cybersecurity audits. Just this year, the agency, along with the Financial Services Information Sharing and Analysis Center (FS-ISAC), rolled out a webinar on its new exam tool, the Automated Cybersecurity Examination Tool (ACET). NCUA plans to begin performing cyber-examinations on credit unions later this year.

Never fear, help is coming right away, in the form of Cybersecurity education and resource sessions hosted by the New Jersey Credit Union League:

Effective July 1, new warranty and indemnity rights, liabilities and obligations to Regulation CC (Check Cashing) may impose greater risks for credit unions. The final rule creates a new Remote Deposit Capture Indemnity in Section 229.34(f) that addresses the allocation of liability when a depository institution, such as a credit union, accepts deposit of a check through “remote deposit capture.” Meaning that the depositor (member) sends the credit union electronic information about a check, such as a photographic image, which the credit union then uses to create an electronic check, or substitute check, for collection.

The indemnity is provided by the credit union that accepted a check by remote deposit capture to a financial institution that accepted the original check for deposit in the event the financial institution that accepted the original check incurred a loss because the check had already been paid. There is an exception in the final rule that added an exception to the indemnity which would prevent a bank from making an indemnity claim if it accepted the original check containing a restrictive endorsement inconsistent with the means of deposit, such as “For Mobile Deposit Only.” One step a credit union could take is to talk to your check vendor to inquire about printing checks with a checkbox on the back which states, ”Check here if Mobile Deposit”. Caution: there has been some question as to whether simply checking that box fulfills the restrictive endorsement requirements under the check cashing regulation.

Credit unions that accept checks by remote deposit capture will want to review the language in your Mobile Check Deposit Agreement, or Remote Deposit Capture Agreement, that requires the credit union’s member to add a specific restrictive endorsement to the check, such as “For Mobile Deposit Only to “insert credit union name”into account #123456789” and to add language for the new check box, which identifies the check as “For Mobile Deposit” to be checked.

By: David Frankil, NJCUL President/CEO

Last night I was fortunate enough to participate in the 80th Annual Meeting of Members 1st of NJ FCU, in South Jersey. President/CEO Eileen Crean and her team did a terrific job, with over 140 members in attendance.

One of the highlights for me was being able to visit with their Board Chair, John Henderson. John’s father Laurence Henderson was member #4 of the credit union, which was known back then as Cumberland Teachers FCU.

John brought his father’s passbook, from the earliest days of the credit union.

Marissa is working on a more detailed version of their story for our Legacy Series, but I just had to share these pictures. John pointed out the withdrawals during the more lean war years, highlighting the role the credit union played in their family’s personal history. And our members today won’t see any strike-throughs on their accounts when we make corrections. :)

In financial services, it is easy to get so caught up in the efficiencies of technology that the personal connection can be lost – look at our friends in the banking world.

What differentiates us is the direct, one-to-one relationship we have with our members.

By:MaryAnnKoelzer,TechnologyProductManager,CUSolutionsGroup

I Googled “Credit Union Compliance Resources” today – this returned nearly 18 million results. 18 million. Finding the resources that are best for your credit union can be like finding a needle in a haystack.

There is certainly no lack of resources available, but as compliance professionals, we often find ourselves pulled in many directions – staying on top of ever-changing compliance rules and regulations, training staff, updating policies and procedures, and the many, many things we do in between, that finding time to research and filter through the numerous compliance resources can sometimes feel overwhelming.

We often know there are resources we are missing, but the day-to-day demands of our jobs simply don’t allow for the time we need to find the resources that make a real difference – and actually relieve some of the burden. It’s easy to fall back on “what we’ve always done” instead of moving forward with a better solution.

At the New Jersey Credit Union League's upcoming Compliance Conference, we will take a look at the abundance of Compliance resources the League has available for its member credit unions, and we will take a closer look at 10 specific tools and resources that are often overlooked and underutilized. You’ll be sure to find your needle without digging through the haystack!

Here’s a sneak peek!

InfoSight Checklist List will help you check it off your list

InfoSight Compliance Videos for when you’re tired of reading

CU PolicyPro Redlining keeps track of changes so you don’t have to

CU PolicyPro Editor Notes are better than a scrawled note in the margin

CU PolicyPro Training makes everything easier

CU PolicyPro Publishing puts it all together

Shared Compliance so you don’t have to do it

ComplySight Complaint Management System because every credit union needs one

By:DavidReed,Attorney,ReedandJolly,PLLC.

Let’s face it, we live in a world where many different things can go wrong at our credit union very quickly. Add that to the fact that our news cycle has gone from days to seconds, and you must understand that you need to be prepared. Crisis communications boils down to anticipating likely negative events and preparing your message before it happens.

Here are a few simple tips to initiate your crisis communications plan:

Create a Crisis Management Team made up of key stakeholders and arm them with a written crisis response plan and a complete contact list, which includes cell phone numbers;

Remember to include volunteers as well as needed local resources such as police, fire, rescue and utilities. Many institutions offer these resources to the team members in paper and on a thumb drive or other convenient device in case internet access is down for an extended period of time;

Conduct a quick inventory of likely negative events. You need to look no further than your local newspapers or trade publications to see that data breaches, internal fraud and potential legal claims are just a few likely negative scenarios. Understand the basic components of each scenario and be prepared to assess the full scope of the issues presented. Prepare an outline of the potential negative member impact and create a message that places a positive spin on each;

Consider conducting periodic table top exercises involving all staff and focus on a specific scenario and the responsibilities each person will have during that event. Remember the old adage, knowing is not enough, we must apply it; and

Finally, create a clear “chain of communication command”, which selects the primary spokesperson and emphasizes the need for a consistent message. In other words, only one person is able to make official comments for the credit union.

You will need to work elements of crisis communications into all of your related policies and procedures, including Disaster Recovery Plan, Social Media Policy and Employee Responsibility or Conduct Policies. Targeted preparation can reduce the sting of a negative event, and place your credit union in the best possible light during the darkest of moments.

At the League's July 13, 2018 Compliance Conference, I will discuss the EEOC guidelines regarding employer liability and discuss what actions credit unions need to take in order to comply with the various guidelines to prevent harassment and enforce effective complaint procedures. Register now!

By: Chris Abeel,NJCULVice President, Corporate & Governmental Affairs

So, there were little or no surprises in this week’s Congressional primaries in New Jersey. Those incumbents running for re-election won their party’s nomination for another term, and all CULAC-supported candidates won their races.

In one of the two open-seat districts, CULAC supported state Senator Jeff Van Drew, a strong credit union supporter, to be the Democratic nominee to succeed Congressman Frank LoBiondo in New Jersey’s 2nd District. A long-time credit union supporter, LoBiondo decided to retire rather than seek a thirteenth term.

Van Drew will face-off against GOP nominee Seth Grossman in November. The Democratic Congressional Campaign Committee has targeted the district in its “red to blue” program, and the Cook Political Report rates the race as “Leans Democratic”. Right now, the 2nd District is looking like it’ll be a pick-up for the Dems in November.

We haven’t taken a position yet in the other open-seat, the 11th District, where 12-term Congressman Rodney Frelinghuysen is retiring. We’ll see how that race develops before jumping in.

Here’s a rundown of where CULAC contributor dollars have gone to in this year’s primary races here in the Garden State:

Josh Gottheimer for Congress: $5,000

Leonard Lance for Congress: $2,000

Tom MacArthur for Congress: $5,000

Bob Menendez for US Senate: $4,500

Donald Norcross for Congress: $4,000

Frank Pallone for Congress: $5,000

Bill Pascrell for Congress: $ 5,000

Donald Payne, Jr. for Congress: $3,000

Jeff Van Drew for Congress: $5,000

Another $10,000 has already been provided to four campaigns for the November election.

Our total for the primaries comes to $38,500. The additional $10k for the general brings us to $48,500 so far. We expect to spend another $20k or so between now and November. The total far exceeds the amount we raise.

CULAC allocates those funds based on seniority and Committee assignments, along with philosophical compatibility. So, we can take some solace in the fact that the New Jersey delegation is both influential and sympathetic to credit union issues.

Contact me at cabeel@njcul.org or 1-800-792-8861 ext. 127 for more information on CULAC.

You might also want to register for my Political & Legislative Update webinar scheduled for next Friday (6/15) at 2 p.m. where I’ll recap Tuesday’s election results, and make a few predictions about what we may see in November. You can register here for the free webinar.

Credit unions must implement and enforce strong policies prohibiting harassment and effective complaint procedures. Credit unions can prevent unlawful harassment and thereby create a good working atmosphere for all involved.

At the League's July 13, 2018 Compliance Conference, I will discuss the EEOC guidelines regarding employer liability and discuss what actions credit unions need to take in order to comply with the various guidelines to prevent harassment and enforce effective complaint procedures.

By: Barbara Agin, NJCUL VP, Member Experience & Education

Don’t forget the NJCUL is bringing Eric North back to New Jersey on June 12 to talk about some important collections issues. Eric is a credit union attorney who (in addition to practicing law) works with our League, CUNA, and others to teach credit unions and credit union lawyers about legal issues involving lending, collections and bankruptcy. He’s also the guy who warned credit unions about repossession, reaffirmation and TCPA litigation years before the lawsuits started to roll in. He’s always received great reviews when he has been here in the past; credit unions often tell us he makes complicated subjects both interesting and understandable.

One of the issues Eric will be talking about is Collecting MLA-Voided Debt. This is a critical issue that many credit unions are wrestling with and that is a high risk for class action litigation. Eric will explain the problem and the options you have available for dealing with the problem. Another is Handling Credit Reporting Disputes, a subject that continues to be one of the leading causes of litigation against credit unions. In addition to those subjects, Eric plans to talk about:

Repossessions

Offsetting and Enforcing Liens on Shares in New Jersey

Filing and Updating Bankruptcy Proofs of Claim

Chapter 13 Plan Changes

Credit unions that have participated in Eric’s New Jersey programs in the past have consistently told us they are glad they did. We hope you’ll join us, too, on June 12 for this informative Collections Workshop.

By: Chris Abeel,NJCULVice President, Corporate & Governmental Affairs

Our strength has always been in our numbers. We’ve never been able to compete with the bankers’ deep pockets but, then again, they’ve never been able to compete with our grassroots numbers. After all, how many customers love their bank enough to contact their elected officials for them? My guess is not many. Well that’s not the case when it comes to credit unions, and the proof is in!

We just launched another Call-to-Action on the important regulatory relief legislation (S. 2155) making its way through Congress. The Senate passed the bill in March and the House is poised to vote on it next week. We’re on the threshold of an historic legislative victory, and credit union professionals and volunteers across New Jersey have been stepping up to the plate.

We also encouraged our member credit unions to reach out to their members using CUNA’s Member Activation Program (MAP). Aspire FCU, Credit Union of New Jersey, and XCEL answered the call, and the response has been impressive.

The open-rate on emails to their members averaged 25%, with click rates approaching 10%. And, out of more than 89,189 emails, there were zero complaints and only 31 unsubscribes.

Ok, it may be a pipe dream, but imagine this - every New Jersey credit union goes out to its members, a quarter of those members open the email, and 10% of those send an email to Capitol Hill. Our 14-member delegation would be hit with a tsunami of some 25,000 emails!

Imagine the impact that would have. Imagine what we could accomplish if we could mobilize the more than one-million credit union members. This is the stuff lobbyists dream off!

Dreams aside, in addition to thanking all those individuals who responded to our Call-to-Action, we all owe a special debt of gratitude to Aspire, CUNJ, and XCEL for going the extra mile, for taking a special leadership role in this effort.

Staying current on the latest compliance information and regulatory changes is one of the best ways credit unions can get into, and stay in, compliance. Education is the key! Compliance education and training sets the foundation for a low-risk environment that will ensure your credit union's opportunity for sustainability. The New Jersey Credit Union League is your one-stop-shop for comprehensive compliance education and training. The League's Compliance Center has a variety of educational resources available all year round that include convenient and free Webinars, regulatory topic-specific presentations, update sessions, roundtables, workshops, and an annual compliance conference, as well as customized learning for groups or individuals. Training is available to credit union CEOs/managers, staff, directors, and volunteers.

By: David Frankil, NJCUL President/CEO

We’re not trying to send any sort of subliminal message by scheduling the Compliance Conference for Friday, July 13th. But if we were, it would be something along the lines of how compliance is much, much more than just a necessary evil—and how important it is to excise any skeletons in your proverbial closet before anyone from NCUA has to tell you to do so.

By: Chris Abeel, Vice President, Corporate & Governmental Affairs

When Gov. Murphy was campaigning for office last year he pledged to support a number of workplace “reforms” that had been thwarted during the eight years of the Christie Administration. We’ve already seen two become law: pay equity, and a paid sick leave mandate.

Credit unions had two years to get ready for the May 11, 2018 effective date for the Customer (Member) Due Diligence rule (CDD) that adds requirements for certain financial institutions, including credit unions, to identify and verify beneficial owners of legal entity customers (Beneficial Owners) in furtherance of the Bank Secrecy Act (BSA). The U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) published the final rule May 11, 2016.

By: David Frankil, NJCUL President/CEO

We’ve been covering our effort to make ELT a reality in New Jersey for more than a year, focusing on all our progress, finally getting it signed into law by Gov. Christie in the final days of his Administration. If you recall, the law gave the NJ Motor Vehicle Commission (MVC) 60 days to determine whether or not “…the commission has the resources and capability to establish and implement within 12 months…” otherwise they would be required to contract with an outside vendor.

But, as we’ve seen with Prize-Linked Savings, sometimes getting a bill signed into law doesn’t mean the Administration will move quickly on implementation. We’re determined to avoid that fate for ELT, given how important it is to your bottom line.

You may have seen an article in the Daily Exchange this morning reporting on a comment made by the new MVC Chief Administrator. Asm. Mukherji asked a question during an Assembly Budget Committee hearing about ELT, and her response was: “The study is complete for ELT and at this point, the statute requires us to be online within 12 months and we are on track to do just that."

As I’ve noted in prior posts, sometimes the "blocking and tackling" work of our Government Affairs team doesn’t make 22-point, above-the-fold headline news. But, rest assured that question was no coincidence—kudos to Chris Abeel and our contract lobbyist Carol Katz for keeping up the pressure and moving the issue forward.

We will continue to keep you updated on the progress of ELT in the months to come.

The Financial Crimes Enforcement Network’s (FinCEN) final rule, in 2016, added a 5th BSA Compliance Pillar that imposed new requirements for identifying and verifying beneficial owners of legal-entity customers. This new rule, amending the Bank Secrecy Act, became effective in July 2016, and all federally insured credit unions must comply fully by May 11, 2018. Along with credit unions requirement to comply with the existing components of the Customer Due Diligence (CDD) rule, it can all get a bit confusing.

So, what exactly is CDD? And why is it so important?CDD is a critical element of effectively managing risk and protecting you, and your business, against potential association or involvement with financial crimes and nefarious activities. CDD processes are crucial for knowing your member (KYM), and in most cases, CDD involves identifying your member and understanding their activities. This then allows you to assess their risk profile. In the case of high-risk members sometimes, Enhanced Due Diligence (EDD) is needed. This is additional information that must be collected for in order to provide a deeper understanding of member activity to mitigate risks. Member risk assessments can be used to determine which level of due diligence is required.

In order to ensure that your credit union is following best practices, here are 5 steps to improve your CDD processes:

Step 1 – Perform CDD measures before entering into a business relationship with your member to detect any bad actors early on.Ascertain the identity and location of the potential member, and gain a good understanding of their business activities. This can be as simple as locating documentation that verifies the name and address of your member. You have to first decide whether a member fits your established risk profile, before entering into a business relationship with them. You can only do this by undertaking the appropriate CDD measures. This ensures that identity thefts and any potential forgeries can be detected early on.

Step 2 – Strengthen your processes when vetting third parties.You may rely on third parties to help you perform due diligence, however it’s important to choose these parties or providers wisely because the ultimate responsibility for CDD measures remain with you, the credit union, – not the third party. Sometimes, the only way to get the information required for CDD is through a trusted third-party so it’s important to ensure that their standards and best practices are aligned with your business. At the end of the day you are liable and will be fined or penalized for non-compliance.

Step 3 – Ensure that pertinent information has been collected and stored securely.When authenticating or verifying a potential member, classify their risk category and define what type of member they are, before storing this information and any additional documentation digitally. Having a meticulous and comprehensive process for documenting CDD-related information is not only highly effective, it also mitigates any potential risk for you as a business.

Step 4 – Detect if there is a need for EDD.Beyond basic CDD, it’s important that you carry out the correct processes to ascertain whether EDD is necessary. This can be an ongoing process, as members have the potential to transition into higher risk categories over time so, conducting periodic due diligence assessments can be beneficial. For example, most jurisdictions require politically exposed persons (PEPs) to go through the EDD process. Other factors that might trigger EDD are high transaction value accounts, accounts that deal with high-risk countries, or accounts that deal with high risk activities. Factors to consider to determine whether EDD is required include, but are not limited to the;

Location of the person

Occupation of the person

Type of transactions

Expected pattern of activity in terms of transaction types, dollar value and frequency

Expected method of payment

Again, this protects you and your business against any involvement with nefarious activities and also ensures that you are meeting various KYM and Anti-Money Laundering (AML) regulatory requirements.

Step 5 – Keep historical records on hand.Store records of instances of CDD and EDD securely, in a digital format. Keeping records of all the CDD and EDD performed on each member, or potential member, is necessary in case of future regulatory obligations.

By: Chris Abeel, Vice President, Corporate & Governmental Affairs

Assuming Gov. Murphy signs the legislation on his desk, New Jersey is about to join nine other states in the country, becoming the tenth to require all companies provide paid sick leave for their New Jersey employees. Best estimates are that it will affect upwards of one million private sector workers and their employers, taking effect 180 days after enactment.

As they say, the devil is in the details—particularly in how broadly “sick leave” is defined. Paid sick time may also be used for an employee’s mental or physical illness, injury or other health condition, or for preventive care. It may also be used to care for a family member under the same circumstances, or for an absence resulting from the employee or a family member being a victim of domestic or sexual violence if the leave is for medical attention, counseling, relocation, legal, or other services.

This is one of several workplace measures that failed to achieve final approval during the Christie Administration that Gov. Murphy has pledged to approve.

We joined with many others to press for a small employer exception. While unsuccessful on that count, the business community was successful in getting numerous amendments that will ease the burden on employers, including credit unions.

Among the changes, the revised bill permits existing paid-time-off plans to satisfy the measure’s requirements and overrides local ordinances in 13 cities so businesses will have to follow only one uniform set of rules. The amount of paid sick time was also reduced from 72 to 40 hours per year.

As I think of the compromises in this legislation, I’m reminded of the Otto von Bismarck quote that “Politics is the art of the possible, the attainable—the art of the next best.” In other words, it may be less about what's “right” or what's “best,” and more about what can actually get done. In this case, a paid sick leave mandate was a certainty, so these changes are considerable wins for credit unions.

So I ask all my fellow volunteers: have you truly been tested? We volunteer because we heard a higher calling. No one said it would be easy, but one of the keys to success in any endeavor is to continue to learn and educate one's self for the greater good. So I ask you, have you put education in your budget? If so, take advantage of the League’s upcoming Director and Volunteer Conference. The NJ DNA group was created for us. Let's take advantage of this great networking opportunity.

By:BarbaraAgin,NJCULVP,MemberExperience&Education

I recently attended an outstanding workshop facilitated by Michel Neill of Michael Neill and Associates titled, “Creating a Competitive Advantage through Member Experience”. Among the many themes shared throughout the day was “employee engagement.” Michael talked about mission, vision, standards, and more. With a member-driven focus, how much more successful would your credit union be if all your employees understood credit union financials and how their actions each day impacted the bottom line? Am I suggesting that your teller line become mini-CFOs? Certainly not; however, a strategic focus shared by all employees would be the ultimate engagement…

The Custom Performance Report (CPR) is a tool provided quarterly to NJCUL members as a FREE benefit of membership. This tool allows you to view your credit union’s vital signs, such as equity, loan to share ratio, yields, and net fee subsidies…examples of financial health indicators.

NJCUL has partnered with Dr. Randy Thompson from TCT Risk Solutions to deliver quarterly webinars that delve into the content found on the CPR. The first webinar was held live on March 7th and is available as a recorded session.

In my recent conversation with Tom, he shared that the credit union holds monthly management meetings and felt that the CPR Webinar Series was a valuable tool to be included in their ongoing meetings. This is an excellent use of the series. It is also a great education piece for directors.

The series is priced at just $199, which makes it an affordable tool for all.

If you have had the pleasure of working with Dr. Thompson, then you know he has a talent for presenting difficult content in an easy to understand manner; perfect for non-financial folks.

Click here for more information and to purchase the series. When you register, the first recorded webinar, titled “Industry & Peer Group Analysis” is available immediately. The next live webinar will take place on June 6, 2018 and it will focus on the topic of “Earnings.”

By: Chris Abeel, Vice President, Corporate & Governmental Affairs

Sometimes we measure progress in great leaps (Electronic Lien and Titling signed into law), and sometimes we measure it in inches. In this case, ensuring parity for New Jersey credit unions buried deep in the minutiae of pending legislation.

Both houses of the state Legislature are slated to vote tomorrow on legislation that liberalizes investments for the state’s 48 joint insurance funds, or JIFs. JIFs are self-insurance pools formed by groups of local government entities such as municipalities and school boards. Because they’re capitalized with taxpayer funds, they fall under the same investment rules as other local government agencies.

A provision in the legislation also liberalizes available investment vehicles for the state’s 566 municipalities, 611 school boards, and countless other local government authorities.

Buried among the various types of investments is language to permit what are called CDARS, short for Certificate of Deposit Account Registry Service. So what are CDARS?

CDARS are syndicated CDs that enable a financial institution to offer essentially unlimited FDIC coverage. In short, the CD is broken up into insurable amounts and then syndicated. The institution then receives syndicated deposits for the same amount. The customer receives a simple consolidated statement, as if they had an account with the one institution.

As originally introduced, the legislation allowed for the deposit of public funds into “multiple FDIC-insured accounts.” We were successful in obtaining an amendment that broadened that language to include federally-insured credit unions, not just FDIC-insured depositories.

From a global perspective, it’s not only good public policy, but, frankly, critical that NCUA’s Share Insurance Fund always be given parity with FDIC insurance.

More specifically, we’re focused on making sure that New Jersey credit unions have as many growth opportunities as possible.

Please let us know if you are pursuing CDARS with government entities as a growth strategy – we’d like to help once the legislation is signed into law.

By: David Frankil, NJCUL President/CEO

It probably doesn’t rank high on anyone’s top 10 list of favorite activities, but writing, updating, and tracking all of the policies required by NCUA is important. Not to mention a topic frequently cited by examiners.

One of the most-used free benefits of NJCUL membership is a subscription to CUPolicyPro, which provides access to over 230 credit union-specific model policies—plus a full online system to make managing them a snap.

We wanted to make sure that all of our members were making maximum use of this great resource, so Nicola has scheduled two free webinars this month:

Best practices, how content gets updated, and using reports to audit policies.

Our speaker is an expert in the field – Mary Ann Koelzer, from CU Solutions Group, the organization that runs CUPolicyPro and a Business Partner of ours. Mary Ann has been a frequent presenter on compliance topics to credit unions, and has worked with several hundred credit unions of all sizes across the country.

Click on the links above to register – look forward to seeing you on the webinars!

By: Chris Abeel, Vice President, Corporate & Governmental Affairs

To say that March was exceptionally productive for credit unions and their members when it comes to regulatory reform advocacy would be an understatement. Legislative wins are usually few and far between, but in March, the stars seemed to align for credit union issues.

We crossed a bunch of items off of our U.S. House to-do list. Legislation was introduced to change the structure of the CFPB from a single director to a five member commission – and then the House passed both the Taking Account of Institutions with Low Operation Risk (TAILOR Act) and the Financial Institutions Examination Fairness and Reform Act.

But our most significant victory occurred in the Senate, with passage of the landmark Economic Growth, Regulatory Relief and Consumer Protection Act (S. 2155), following House passage of the Financial CHOICE Act last June.

These victories wouldn’t have been possible if it weren’t for the relentless grassroots advocacy by credit unions that included the GAC Hike the Hill just two weeks before, and the more than 50,000 messages sent to Senators in support of S.2155. I’m proud to say that New Jersey credit unions played a significant role in this effort, with responses to our calls-to-action.

I'm fond of referring to what I call the “3P’s” of legislative advocacy – policy, politics and process – and how a successful initiative has to prevail on all three. We’ve pretty much won on the policy and politics of S. 2155. After all, how often do credit unions and community banks agree on a bill? That said, the process is the challenge facing us now, getting it final legislative approval and onto the President’s desk.

Like a ping-pong ball, S. 2155 has gone back to the House, and it is now up to them to act. House Finance Services Committee Chair Hensarling is expected to try to add additional relief provisions from his Financial CHOICE Act. But with an abbreviated election year schedule, it’s essential that the House act quickly and avoid a conference committee to reconcile differences in the two bills, a process that might derail the legislation altogether.

So today you should have received another call-to-action, this time targeted at our House delegation. It’s going to take the same level of grassroots advocacy on the House side if we’re going to get this one across the finish line before Congress recesses for the campaign season.

Is your credit union cybersecurity ready? In May of last year, the National Credit Union Administration (NCUA) communicated to credit unions in the wake of the “WannaCry” global ransomware attack, reminding them to verify they had effective controls in place to prevent similar cyberattacks.

The WannaCry attack hit more than 300,000 victims in 150 countries, including the U.S., disrupting critical infrastructure, businesses, financial institutions, and healthcare markets. Then, on September 7 of last year, the public found out about the Equifax data breach. In the wake of the breach, credit unions, like other businesses, found themselves scrambling to notify their members and checking to see what, if any, impact the breach and its direct or indirect partnerships with Equifax, would mean to the security of their members’ private data.

Here we are in 2018. In response to the critical impact of information technology and information security breaches (also known as cyberbreaches, cyberattacks, cyberhacks) NCUA has developed and will begin using its NEW Automated Cybersecurity Examination Tool (ACET) this year. The ACET provides NCUA with a “repeatable, measurable and transparent process for assessing the level of cyber preparedness across federally insured institutions,” according to the agency in its Letter to federally-insured credit unions CUs: 17-CU-09, Supervisory Priorities for 2018. NCUA also said, “The ACET incorporates appropriate standards and practices established for financial institutions. It also aligns with the Cybersecurity Assessment Tool developed by the FFIEC for voluntary use by banks and credit unions. Therefore, we encourage credit unions to continue to self-assess their cybersecurity and risk management practices using the Cybersecurity Assessment Tool if they do not have an alternative method of assessment”.

NCUA will begin using the ACET in examinations of larger credit unions with more than $1 billion in assets to create a baseline for the cybersecurity maturity level of the largest and most complex institutions. The agency will continue to test and refine the ACET through 2018 to ensure it scales effectively for smaller, less complex institutions

The National Automated Clearing House Association (NACHA) is gearing up for the March 16, 2018 effective date for Phase 3 of Same Day ACH: Moving Payments Faster and so should credit unions. That’s just the beginning. New capabilities of Same Day ACH become effective over three phases to allow financial institutions and businesses to acclimate to a faster processing environment, as well as to ease the implementation effort. Beginning March 16, 2018, Receiving Depository Financial Institutions (RDFIs) will be mandated to make funds available from same day ACH credits (such as payroll Direct Deposits) to their depositors by 5:00 PM at the RDFI’s local time. The Rule enables the option for same day ACH payments through additional ACH Network functionality, without affecting previously available ACH schedules and capabilities.

Originating Depository Financial Institutions (ODFIs) are able to submit files of same day ACH payments through two additional clearing windows provided by the ACH Operators (Note: The actual ACH Operator schedules are not determined by the NACHA Operating Rules.):

Virtually all types of ACH payments, including both credits and debits, are eligible for same-day processing. Only international transactions (IATs) and high-value transactions above $25,000 are not eligible. Eligible transactions account for approximately 99% of current ACH Network volume. All RDFIs are required to receive same day ACH payments, thereby giving ODFIs and Originators the certainty of being able to send same-day ACH payments to accounts at all RDFIs. The Rule is based on a solid foundation of economic research on the use cases for Same Day ACH. All consumers, businesses, government entities and financial institutions that use the ACH Network to move money between bank accounts will benefit from the option to move ACH payments faster. NACHA projects that ACH Originators would generate approximately 1.4 billion same-day ACH payments annually as of ten years after full implementation and rollout, primarily for transactions that can be initiated before 2:45 PM ET on business days (not on weekends or holidays), and that do not require real-time functionality.

Using an expert, third-party economist, NACHA assessed 10 primary use cases for Same Day ACH. Significant use cases for Same Day ACH include:

Same-day payrolls, supporting business’ needs to pay hourly workers, and providing flexibility for late and emergency payrolls and missed deadlines; and enabling employees to have faster access to their pay in these cases;

Business to-Business payments, enabling faster settlement of invoice payments between trading partners, and including remittance information with the payments;

Expedited bill payments using both ACH credits and debits, enabling consumers to make on-time bill payments on due dates, and providing faster crediting for late payments; and,

Account-to-account transfers, providing faster crediting for consumers who move money among various accounts they own.

Learn more about Same Day ACH with NACHA’s Resource Center and click here for access to the Association’s Summary of recent NACHA’s rules changes.

Click here for a schematic to help you understand and prepare for Same Day ACH – Phase 3.

By:BoMcDonald,YourMarketingCoPresident/Founder/CEO

So, where does great marketing come from? It begins with experts who understand the mission and vision of their organization. But rather than trying to convey that vision on their own, the experts collaborate with their team to accomplish the goals set forth in a strategic plan. When it all works properly, the end result is a product or service that makes a difference in the world. Great marketing is a classic example of the whole being greater than the sum of its parts.Great marketing is a subjective concept. Some people would tell you it refers to creative ads with clean design while others might use the term to describe a clever campaign with a catchy tagline. To me, great marketing is communication that moves people to take action, action that ultimately results in the achievement of your organizational goals. In short, great marketing connects people with your brand while inspiring action and creating relationships in the process.

Too many marketing campaigns focus solely on commodity messaging (“We have checking accounts.”) instead of communicating a solution for a specific need or problem. With this short-sighted approach, incentives are launched (“Get $100 cash back with every auto loan!”)without understanding the auto loan’s true cost of acquisition, and promotional material is created based on marketing ideas “borrowed” from other credit unions. Rather than putting a fresh spin on someone else’s idea, great marketing addresses the individual needs of your credit union’s ideal member.

If you’re responsible for growing loans and membership at your credit union, we want to help you achieve those goals. Our success hinges on your success, so we’re ready to dig in, work together, and help you craft a strategic marketing plan that provides measurable benchmarks and stays within your budget. By working with us, you’ll learn how to develop well-defined goals, crystal-clear messaging, strategic action steps, and effective communication methods. And that is what great marketing is made of!

Hear from Bo and Your Marketing Co Digital Director Marne Franklin at the League's 2018 Marketing Conference on May 8th. Bo will lead a session on "Being Strategic About Marketing" and Marne will share her digital expertise during her sessions titled "Making Your Member Experience Better on Digital Channels". More information and registration is available here.

Cloud adoption has continued to increase across the financial sector. And why not? Over the last few years, the benefits of using cloud based technology for your credit union has indeed become more popular, as some of the myths have been debunked and usage has become more widespread. Cloud-based systems can be customized and scaled to fit any size credit union and can bring efficiencies to your credit union's core technology. Taking your tech into the cloud might be just what you're looking for.

Here are 5 reasons why hosting your core technology in the cloud is a great idea:

Enhanced data securityData security is a high priority for any business, but even more so in the financial sector. When switching over to core in the cloud, one of the great benefits is that the data is stored remotely, securely and redundantly. Choose a system and service provider that not only stores critical system and member data in the cloud but also documents and images. Rest assured that your critical data is effectively locked away and safeguarded, available only to you and your members.

The cloud will make your IT staff more efficientChoosing to migrate to a service provider who can host your core technology in a cloud may sound like a huge undertaking but it will generate efficiencies and provide cost-savings in the long run. It will free up your IT staff and give them more time to work on member-facing tech improvements or projects. This can alleviate them from being tied down with daily maintenance, vendor management or disaster recovery planning. Removing the need for third-party vendors to help maintain your system also reduces cost and streamlines problem resolution.

The cloud will reduce the cost of replacing outdated software and hardwareSimilarly to how your car depreciates as soon as you drive it off the lot, new hardware and operating system advances and upgrades are being made regularly. You might find yourself spending a small fortune just to keep up with the latest operating system in order to keep it compatible with your new hardware or vice versa. The beauty of a cloud provider for your core is that they will keep the hardware, operating system and infrastructure up to date and ensure the newest software fixes and security patches are in place as soon as they are available. They will ensure any transitions are seamless, and take the worry - and expense -out of having to keep up.

Training for your staff is provided by experts who know their productAny time a new platform or application is introduced, there is always a learning curve for your staff, and often your IT person is charged with the roll-out and education. Working with a cloud-based service provider has the benefit of the provider being responsible for the smooth roll-out and implementation of their product, which includes training for your staff by experts with a huge knowledge base of their own product. They are on-call and available to answer any questions and can help troubleshoot when any situation arises.

The cloud is a great option that is cost-effective and reliable, and not just for backup and disaster recovery purposes.Storing your data in a cloud-based solution makes sense for many different reasons. Data centers that store the cloud servers and run your applications have highly redundant connectivity, reliable backup generators, no single point of failure and the expertise on staff to quickly address any problems in the case of a disaster or disruption in uptime. In addition, you want to be able to have access to your data reliably, know that it is automatically backed up, and seamlessly accessible from your desktop.

Migrating credit union core technology to the cloud is a big decision and choosing the right company to work with is important. You want to make sure they have up-to-date infrastructure, can provide the services your credit union needs, and offer round-the-clock support.

Core systems should create operational efficiency, which directly impacts key metrics such as efficiency ratio, net income per full-time employee, members per employee and cost of technology per member. If you don't know your credit union's key metrics, FLEX can help. FLEX has increased efficiency in more than 240 credit unions in 46 States. Celebrating our 40th year of core processing services to the credit union industry, our mission of unsurpassed excellence and efficiency remains the same.

See a live demo of FLEX as well as four other core processors at the League’s Core Processing Solutions Forum on Thursday, April 5. More information and registration is available here.

By: CU-Interface

1. Expiration Dates: There are often three important dates you should know. It is important to know these as missing any one of them could prevent you from changing core processors.

a. Core expiration date: Watch out for language that changes the original date, such as “core contract start date will move when new features are activated.” If the start date is moved, so is the expiration date.

b. “Intent to Deconvert” notification date: Not communicating your intent to deconvert could be used against you as a failure of contract.

c. “Automatic Renewal” date: Without communicating that you do not want your current core to automatically renew, you may get locked into another contract with your provider.

TIP: Uncovering these dates confidently is a great task to assign to your credit union’s Attorney.

2. Pain Points: What are the three main pain points you are currently experiencing? These should be the three areas that if improved would have the most dramatic impact on your credit union.

3. True Core Cost: Knowing your current “True Core Cost” is very helpful information to have throughout your search. True Core Cost is your core cost plus your ancillaries’ costs. For example, only a handful of cores offer Document Management and Integrated Home Banking within their platform. Most cores have these as bolted on third parties, which are separate costs charged to the credit union. The cores that offer these services within their platforms have the associated costs rolled into their overall core cost. To understand your True Core Cost please contact us at cdabney@cuinterface.com for a complimentary calculator. Once you know how much your current core is costing you, you’ll be better prepared to review proposals.

CU-Interface believes credit unions should thrive in today’s world by taking full advantage of their core’s technology, not merely survive despite the limitations of their core data processors.

CU-Interface’s core, called mpowered, leads in technology, doesn’t nickel-and-dime, and has an average ticket turnaround time of less than 24 hours. Credit unions of any size are mpowered with the tools they need to focus on what matters most – their members!

You may not have heard of CU-Interface because that’s been intentional! CU-Interface has carefully watched how other cores have grown and has taken the approach of limiting the amount of credit unions they add each year so they can continue their high standards of service and their lightning fast core enhancements. With this intention, they’ve developed a portfolio of in-house created core search tools that has helped numerous credit unions partner with the right cores based on the credit unions’ goals and needs. These core search tools are complimentary, be sure to ask for them at the show.

See a live demo of mpowered as well as four other core processors at the League’s Core Processing Solutions Forum on Thursday, April 5. More information and registration is available here.

By: David Frankil, NJCUL President/CEO

It’s safe to say that it has been years—maybe even a decade or two—since the League hosted its own Directors Conference.

Sure, we’ve had the NJDNA meetings for a while, but compared to an in-depth conference, they are limited in scope and scale, and the format really doesn’t permit us to dig deeper into the issues facing our Directors and credit unions. There is certainly no lack of Director-focused conferences around the country that can fill this void, but they lack a local orientation—not to mention the expense and hassle of travel to expensive locations.

Seeing a need but wanting feedback before we took the plunge, we asked a group of our most active Directors to help us assess whether we needed a Conference here in New Jersey, and if so, what it should focus on. The group, which we named the conference steering committee, included:

Paul Camella – Pinnacle FCU

Peter Carpena – Pinnacle FCU

Gary Chizmadia – Credit Union of New Jersey

Pam Elliott – Lakehurst Naval FCU

Larry Rosenthal – Hamilton Horizons FCU

Walt Tanalski – Manville Area FCU

Anita Whalen – Atlantic Health FCU

We posed two questions to start, and here is what they told us…

There are plenty of Director’s Conferences around the country – do we really need a local, NJ-only event?

Yes - because we live here. We have a different economic climate than the rest of the country. We are the highest taxed state in the union and at the same time are trying to convince people that a credit union is the best and safest place to entrust some of their wealth.

It would let us truly focus on local issues and solutions – no national conference will ever include discussion on topics like taxi medallions, or how NCUA is dealing with our issues in our State.

It would allow us to meet and get to know fellow NJ directors in a peer-to-peer format.

We have Directors that have wanted to go to some of those other conferences, but we couldn’t send them because they were too expensive. A local conference would alleviate travel/expense concerns.

A local event allows for timely updates on the issues we’re facing today.

It would demonstrate that the League understands the needs of volunteers and supports them.

Is it important for Directors from different credit unions to meet in-person?

Many of our Directors work in isolation, and we are all facing many of the same issues. This would help New Jersey Directors be the best representative for their members.

It would allo us to:

Share knowledge of issues/solutions related to NJ CUs.

Realize we all have many of the same concerns whether large or small.

Get to know other Directors personally, and see who you are actually talking to.

See the passion Directors have for their members.

Learn, to dig into the details of what the other person did. To hear and see the emotions of that person on the topic under discussion.

We then turned to the question of content:What topics would you as Directors see as compelling and relevant? We heard a few common themes:

Leadership – help us be better leaders for our credit union

Focus on our common issues and help us solve them

Provide ample opportunity for small group discussions, interaction and networking

Help us look over the horizon – how is the environment for credit unions changing: economic, political, regulatory, etc.

Best practices – from how to grant loans, to where we invest excess funds, to maintaining reasonable liquidity, to the number of employees we have doing the daily business, to fraud prevention.

Following on this input, we’re proud to announce the 2018 NJCUL Director and Volunteer Conference, starting Friday evening May 4 with a reception and running through Saturday, May 5, at the Chauncey Conference Center in Princeton, NJ. Check out the line-up of speakers and topics:

Chris Dawe – Chris is a nationally recognized credit union turn-around expert who works with NCUA and State regulators, and who is currently working with a New Jersey credit union. Chris will focus on a topic that too many New Jersey credit unions have faced or will face – navigating through difficult financial times.

Ryotaro Tashiro – A specialist at the Philadelphia Federal Reserve focused on the region, Ryotaro will provide a detailed review of national and regional economic conditions, monetary policy, and the role of the Federal Reserve in the economy, with a special focus on New Jersey.

Bob Fouratt – NCUA requires Boards to receive financial literacy training. Bob has been providing accounting, auditing, and consulting services to credit unions for over 35 years, and will present content that will not just satisfy the NCUA requirement, but help attendees apply the knowledge to their Board responsibilities.

Scott Butterfield – A trusted advisor to credit unions across the country, Scott will provide best practices for looking over the horizon, by developing strategic thinking skills.

Glory LeDu – CEO of League Infosight, Glory will focus on the role and right balance in developing an effective Board role in policy review.

Drew Edwards – An attorney who works with many New Jersey credit unions, Drew will focus on an issue that many Boards need to address as NCUA’s focus evolves: Director duties and indemnification.

60 Ideas in 60 Minutes – We’re taking networking and peer-to-peer content to the next level – attendees will share their best practices in a rapid-fire session designed to get as many great ideas on the table in as short a period of time as possible!

I want to thank the members of our leadership group for their help in developing a killer line-up of topics and speakers. More details to come on the content, but you can learn more and register here.

By:BarbaraAgin,NJCULVP,MemberExperience&Education

“The only source of competitive advantage is the one that can survive technology-fueled disruption: an obsession with customer experience.” – Harley Manning, Forrester Research.

Credit unions were founded on a “people helping people” philosophy. Does this resonate with employees? Does a teller at a credit union look at his or her job differently than a teller at a bank? If not, why not?

The answer is culture.

What is organizational culture? It is not about structure changes. It is not about systems or a mission statement; it is about behaviors, a shared set of values that drive how you (credit union employees) do what you do. A company’s culture is “felt” by members through experiences.

I love this industry; however, often credit unions feel that they are better than banks just because they are credit unions – and that is not enough.

We are proud to bring to you an impactful leadership workshop facilitated by Mike Neill. Mike and his organization work exclusively with credit unions, teaching them how to become more profitable through outstanding leadership. Listen to his podcast on Organizational Culture to get a better idea of the key elements of a thriving credit union culture, and how exactly leaders can create a thriving credit union culture.

Click here to learn more about the "Creating a Competitive Advantage Through Member Experience Workshop" taking place April 10th.

This week, a credit union leader made NJCUL aware of a skimmer placed on a Wawa automated teller machine (ATM) located in the southern New Jersey town of Woodbury Heights. Thousands of dollars were skimmed from the victim’s account virtually overnight.

Card Skimming is a method used by criminals to capture data from the magnetic stripe on the back of an ATM card. Devices used are smaller than a deck of cards and are often fastened in close proximity to, or over the top of, the ATM's factory-installed card reader, and they are popping up everywhere, including across the state of New Jersey. According to a recent article posted by BankinfoSecurity, despite the recent bust of an alleged skimming ring in Massachusetts, ATM fraud is on the rise and shows no sign of abating.

One industry expert has a list of incident response tips (provided below) for financial institutions that want to fight back against ATM skimming attacks. Mike Urban, Senior Director of Fraud Solutions at FICO, says all types of ATMs—and even pay-at-the-pump gasoline stations—are under attack. According to BankinfoSecurity, in the last month, several skimmers have been found at gas stations around the nation, where the tech-savvy fraudsters are placing readers to capture the PIN and the card number before the PIN is encrypted. "I predict we're going to see more of those," Urban says. "They are targeting the weakness of the mag stripe, and that will be something we have to live with until a better solution is developed.”

The current trend began slowly, says Urban. Several years ago, the targets were primarily off-premise ATMs. Criminals could buy ATMs, place skimming devices in them, and collect card and pin information. Urban warns that criminals have begun focusing on financial institutions' ATMs once the encrypting PIN pad and other advancements in technology changed how PINs were protected.

Keep in mind:

Criminals placing skimming devices will target an attack for a day, a weekend, or a short period of time.

They usually go to other ATMs of the same model/make to attack that fit the look of the skimming device.

They are much more sophisticated than previous skimming devices.

"They also use the same paint coatings, so they are getting access to that information somewhere—those compounds that generally aren't available at a local hardware store,” says Urban. “You can't go in and order ATM gunmetal grey paint. There is a real industry around the creation of these ATM skimming devices."

The Challenge for Credit Unions Many financial institutions, including credit unions, have not invested in real-time fraud monitoring of PIN-based transactions, Urban says, because traditionally risk has been lower. His advice: Institutions need to take a hard look at where they're going to spend monitoring money. "By now I mean getting ahead of the curve before the fraud starts to happen, and get PIN-based card transaction monitoring in place."

Technology advancement won't stop a determined criminal. It is a cat and mouse game, and from what Urban sees with increased skimming in the UK and Canada, "We're going to see significant increases in skimming."

Below are a few steps, suggested by Urban, that you can take now to help your credit union move toward combatting card skimming fraud. The League is also hosting a Cyber Security Roundtable on March 21 with FBI Supervisory Special Agent Brett Yeager who will discuss current and emerging cyber threats as well as security controls that can be used to protect your critical systems. Register here.

Action Items for Credit Unions:

Have a Plan — For what you do if you find a skimming device on one of your ATMs.

Document the Plan — List everything that should happen, people to be contacted, actions to be taken.

Educate Your Branch Employees — If a device is found, all employees should know what and what not to do. Educate branch employees and third-party vendors, as well as ATM servicers. Make sure they are monitoring the outside of the ATMs for residue or devices that actually are on the ATM.

Inspect All Locations — Frequently, checking the fascia and surroundings around the ATMs, making sure nothing has been added or moved.

Set ATM Standards — Including visual standards for all ATMs in all branches. Keep it standard. Take a photograph of each ATM, inside and outside. Show employees what it should look like, so ATMs can be quickly examined to see what may be out of place.

Don't Touch Skimmer If Found — Contact law enforcement if a device is found on the ATM. Tell employees to not touch it or pick it up or pull it off the ATM. Secure the area with bank robbery tape until law enforcement arrives.

Be Vigilant At All Times — Increase your checks on ATMs, especially if you've heard of ATM skimming in your area. If there are reports of ATM skimming, increase the number of checks. Even if there are no reports, have employees check ATMs in off-hours and over weekends, which are prime times for skimmers to be put on ATMs.

Contact Other Institutions — Share information with local and regional institutions about what's happening at your branches and make sure they share information with your institution.

For more information on card skimming awareness, contact NJCUL’s Nicola Foggie at nfoggie@njcul.org.

On Monday, the New Jersey Credit Union League (NJCUL) hosted an in-person and virtual Americans with Disabilities Act (ADA) Web site collaboration meeting for credit unions who have been served with lawsuits, received demand letters or who wanted to know more about the issues. The two and a half hour meeting allowed credit union CEOs to collaborate, face-to-face, on the impact of receipt of the legal demands as outlined in the letters, to share next steps, discuss options, and to obtain access to resources. We were joined by representatives of both CUNA and CUNA Mutual Group.

From a credit union point of view, our examiners have often asked, “How do you know your software is the best for your credit union, cost and service?” In other words...have you done your due diligence when it comes to your core?

I have often relied on the NJCUL Convention to gather this information and to present it to our board without prejudice. However, in this day of immediate access, vendors are no longer providing handouts, they want conversations.

And, often we become complacent with our existing system. We are comfortable. We have used it forever. But we should be open to new ideas, change, and software that will do more for us so we can do more for our members.

The League's Core Processing Solutions Forum on April 5th will provide the needed information and that due diligence. It will allow for that initial conversation with a vendor.

We’ve all had our vital signs taken at the doctor’s office. They typically assess our blood pressure, temperature, weight, cholesterol, etc. These signs give our doctor a good indicator on our overall health and alert him or her to areas that may need intervention.

Credit unions have vital signs, too. Equity, loan to share, yields, and net fee subsidies are examples of financial health indicators. It’s critical to know if your vital signs fall in the healthy range. Without the right tools, it’s easy to focus on a vital sign that is healthy and overlook another that needs attention.

We want your credit union to have optimal health. That's why the League began providing Custom Performance Reports (CPRs) to member credit unions quarterly. It is a vital signs tool!

As is true with all data, these snapshots of your credit union's health are only valuable if used correctly.

To help its member credit unions get the most out of this important and extensive data, the League is hosting a series of quarterly webinars beginning in March, led by Dr. Randy Thompson of TCT Risk Solutions.

Who should attend these webinars? Anyone and everyone who is interested in the health of their credit union.

By:BarbaraAgin,NJCULVP,MemberExperience&Education

As we were developing an agenda for our upcoming "All About Mortgages" workshop that focuses on helping credit unions "stepping up their game" in this arena, it made sense to bring in an experienced accountant to speak about risk.

When we reached out to Robert (Bob) Fouratt from The Curchin Group to cover importance of managing risk (which was also covered in a previous blog of ours), early registrants asked if FASB's new Current Expected Credit Loss (CECL) standard and the changes it brings to credit loss accounting would be addressed. I first reached out to NCUA, but they shared that it is too soon for a regulatory perspective. Knowing that this topic was a fit for Bob, we quickly added the session, “A High Level Look at CECL”.

I had a brief conversation with Bob regarding his session on CECL to get a preview...

Bob shared that CECL is going to be the biggest change in credit union accounting of his career. Both the model and the approach for establishing allowance for loan losses is changing. Where the current model estimates current losses today, in the new model, credit unions will have to estimate future losses.

In his session, Bob will do a walk through on the approach – what data credit unions will need to capture, etc. He stressed: you need to start planning now!

Bob also shared that he is planning to hold half-day training sessions during the summer – more on that in the upcoming months.

By: David Frankil, NJCUL President/CEO

Back at my first NJCUL Annual Convention in 2016, we promised you a League that was focused on your needs, providing compelling value and a solid ROI for your dues investment. We’ve spent the last 15 months living up to that promise.

It can be difficult to estimate benefits from legislation, which often only have indirect benefits on our operating environment. But ELT gives us a chance to attach some numbers to a standard business process.

ELT legislation was signed into law by Governor Christie this week, and it requires the NJ Department of Motor Vehicles to determine within 60 days whether it can create its own ELT system within a year, or to outsource it.

We did a back-of-the envelope estimate a few weeks ago, but let’s dig deeper into the analysis. What would ELT save a typical credit union in New Jersey?

Let’s start with an estimate of the additional internal cost of manually processing lien and titles. Assume a typical employee involved in this process is paid a $35k salary plus benefits.Manual processing includes storage, recording/perfecting title, replacing lost titles (if applicable, and this is an additional cost to the CU), releasing the title, and mailing the title (footnoting in internal systems – core/LOS).

Let’s assume this all chews up on average 30 minutes per title, which translates into a cost of $12 per title. And then let’s figure an additional $1.00 per title savings by not having to mail the physical title and additional paperwork or store it.

That gets us to $13 in savings per title - so for a credit union with

100 auto loans per year, the savings are $1,300

500 auto loans per year, the savings are $6,500

1,000 auto loans per year, the savings are $13,000

2,000 loans, the savings are $26,000, and so on.

These estimates are if everything runs 100% perfectly as intended, and doesn’t even consider the extra costs when your credit union might need to replace a lost title, which is a fee of $60.Even with being conservative, that would be a solid ROI on dues for most NJCUL members right there – but go one step further, and include the benefits from reducing fraud and manual errors, which both require mitigation.This is going to differ significantly from credit union to credit union, and we can’t estimate it unless we know your fraud losses and incidence of errors.

For example, this category of costs addresses issues where the lien wasn’t placed correctly, resulting in no lien; or the borrower not making good on the loan, with the lender stuck with no recourse and/or duplicate loans on one vehicle.

So if we assume a combined 0.1% fraud and error mitigation rate, depending on the cost of the car involved, we could be looking at anywhere between $15k-$60k per year for a credit union doing 1,000 car loans per year. In other words, the cost of a single fraudulent car loan or a single error that require mitigation.

So for credit union doing 1,000 car loans per year, the total estimated benefit from ELT is somewhere between $28,000-$73,000.

By: David Frankil, NJCUL President/CEO

You would be hard-pressed to find another credit union CEO who has had as much of an impact on the industry in New Jersey as Ann South. President/CEO of Novartis Federal Credit Union, and a founder of the mortgage CUSO Symbionce Financial Solutions, LLC, Ann has over 30 years of experience in the credit union industry, including mortgage and consumer lending, operations, compliance, and auditing.

Plus she somehow found time to help create the New Jersey Credit Union Foundation, serving on its board for more than 11 years.

When we were looking to provide a series of one-day workshops to help NJCUL members get better at the entire mortgage process, there was really only one person to turn to – and Ann generously contributed her time and expertise to focus the content and pull together an all-star group of speakers.

The topic, ”All About Mortgages: Stepping Up Your Game,” is aimed at helping those credit unions with the capability to offer mortgages (either in-house or outsourced) identify best practices for growing their program, as well as strategies for managing risk and operating efficiently.

We caught up with Ann just before the holidays to get a preview of the workshop:

FRANKIL: I know that many credit unions in New Jersey have some sort of capability to offer mortgages, and certainly want to grow their programs. But how as an executive do you know when you are you ready to take that next step?

SOUTH: There are some essential steps required to properly prepare your credit union for success, not unlike any other major initiative. The first step is to make sure that you have buy-in from the staff, so they see the opportunity and how it can be leveraged. Staff training is paramount, to make sure that the in-house team has all the skills needed. I’d also say that identifying one point person responsible for execution is essential – nice to talk about shared responsibilities, but it is all too easy for things to fall between the cracks unless one person is in charge.

Externally, a well-thought out marketing, business development, and sales plan is a requirement to create a bigger presence and a robust pipeline. If you don’t have the right people in-house, you need to either identify new hires or outsource.

And then of course you need to execute the plan – just like with any other growth strategy.

FRANKIL: Those all sound like what a well-run credit union should already be doing. What do you need to do differently with staff?

SOUTH: I can’t emphasize enough the need to make sure your staff understands the growth strategy and has bought into it. Know in advance that change and focus on growth may make some of them feel uncomfortable, it’s the job of the CEO to lead here. If they aren’t comfortable with the solution and process, they won’t generate results. Beyond leadership, training is essential – in all aspects of the process.

To really push the growth envelope, you’ll also need an incentive compensation piece for the front-line team as well. NCUA is OK with that today, although it wasn’t so comfortable 20 years ago – and there is a persistent misconception that it is not OK today. Today, incentive compensation for front-line staff is status quo, although it does need to be standardized and monitored.

FRANKIL: Managing risk has become a major part of every credit union CEO’s job. How do you manage risk as you ramp the pipeline?

SOUTH: This is a topic we could spend hours on – and in fact we will be, at the mortgage workshop. It is so important to get this right.

You need to run various growth scenarios through the credit union’s Asset Liability Management program. In particular, understand you and your Board's tolerance for long-term assets in what is likely to be a rising interest rate environment.

Look at the S&L crisis, when we had tons of 4%, 30-year fixed mortgages – and rates went up, we had money markets paying 8-9%. I don’t need to tell anyone that you can’t pay 8-9% when you are only earning 4%. This is not just a theoretical exercise, rates can go up quickly – there is some talk of two, three or even four rate hikes next year.

So the key is to look at tolerance for 3-4% mortgages on the books in a rising rate scenario and understand what your balance sheet can accommodate. Each credit union has a different tolerance for that interest risk, but regardless, nobody wants to see their credit union slowly diminish over time.

FRANKIL: We often think of partnering in the context of capabilities, but can’t you also address the risk issue by working with a third party?

SOUTH: With regard to the balance sheet, it is critical to partner with someone that can sell on the secondary market to ameliorate the interest rate risk. Full disclosure, we do this at Symbionce for our clients.

Lots of ways this can be done, from holding some loans in portfolio to selling all of them. Some credit unions will only hold ones that don’t meet secondary market conditions. This is often the first decision made on a loan. There are tons of criteria for whether any given loan might meet secondary conditions. Perhaps the main three are credit, capacity, and loan to value ratio.

The day a member applies, a mortgage officer contacts them and discusses the application, and they can pretty much tell whether it meets secondary market conditions or might be denied. If the loan won’t meet secondary market conditions, and the credit union wants to grant it, then they have to hold it.

FRANKIL: Is there a point at which a CEO should be concerned with concentration risk?

SOUTH: That is not so much an issue with mortgages, except in the context of the Interest Rate Risk issue and ALM. You will see it in the context of member business loans, though, given their size. More typical is the macro concentration issue, which is how many mortgages do you want to hold on the books.

FRANKIL: Let me turn to another favorite topic – compliance. How can a credit union establish effective compliance processes that will scale with planned growth?

SOUTH: I don’t think anyone would argue that the documentation required today is practically unreadable, given the volume of new disclosures that have been layered on in the process over the years, especially since Dodd-Frank was enacted into law. Our regulators have not done consumers any favors.

When it comes to compliance, establishing an efficient process that documents every step is essential. If you manage the process internally, and have any significant volume, you really need a full-time person focused on compliance. If you’re working with an outsourced partner, assessing their compliance process should be an essential part of the due diligence process. Either way, regulators will hold you responsible, whether compliance is managed in-house or externally.

By: Chris Abeel, Vice President, Corporate & Governmental Affairs

So it looks like 2018 is off to a fast start!

Today we issued our first Call to Action for the New Year in an effort to advance a regulatory relief bill in the U.S. Senate as early as possible in 2018.

The Economic Growth, Regulatory Relief, and Consumer Protection Act (S.2155) was reported favorably from the Senate Banking Committee in December. The bi-partisan legislation includes several provisions that would improve the operating environment for credit unions and enhance their ability to better serve their members.

We’re urging credit union professionals, volunteers, and members to use CUNA’s Grassroots Action Center to encourage Senator Robert Menendez (D-NJ) and Senator Cory Booker (D-NJ) to support the legislation. If this is your first time using the grassroots Web site, you’ll need to type in your address information to display the correct message. But don’t worry, it won’t let you send the wrong email!

Successfully protecting the credit union tax status during tax reform is proof positive that when credit unions mobilize good things happen. We’ve gained some significant traction on the regulatory relief front and need to maintain that momentum.

Where you find education and training for credit union volunteers (which is not defined solely as board directors…there are also supervisory committee, asset-liability committee, and credit committee members, etc.) there is usually no lack of options and opportunities. Normally, you will find a list of the usual suspects in the form of topics, but if you look closely at the descriptions, you’ll see that they are generally not as all-encompassing as the word “volunteer” is supposed to imply. Those opportunities appear primarily designed for board directors, not supervisory committee members. While it is clear that board directors deserve and need appropriate education and training as well, typically when a credit union budgets for volunteers to attend conferences and training, they do so with the board directors in mind, so I can see why those industry entities that host and provide training at the volunteer level cater to this specific group.

We know that typically these events are marketed as if they cater to ALL volunteers, but we often see only a lone breakout session or two for the supervisory committee attendees. My point being that board directors and supervisory committee members have very different and distinct roles. Directors are charged with governance and strategic planning, while the supervisory committee members are the “police” or faithful “watchdog” of the credit union, almost the “conscience” of the credit union, responsible for setting the annual audit schedule, reviewing regulatory and external audits of the credit union, and quality control. The fact is that the supervisory committee plays a hefty role in ensuring the credit union stays on track and staying current of the board’s activities and decisions to ensure it is fulfilling its responsibilities to the credit union and its members.

In the past, the duties of the supervisory committee of most credit unions were not vast or complicated. That has slowly changed over the past decade. In recent years, internal and external pressures from the financial and regulatory industries have caused the pace to pick up dramatically. Today, credit unions of all asset sizes are faced with an environment fraught with internal, as well as external threats, including cyber threats, data breaches, internal fraud, third-party partner mishaps, etc. Someone has to be minding the store. But, you can only do that if you know what you are looking out for. Credit unions have little regulatory help on that point as they are empowered to engage consultants and third-party partners to help them accomplish the supervisory committee’s duties and responsibilities.

Bottom line, I only wish to point out that the role of the supervisory committee is a very important one, and we should not underestimate their service as volunteers in this movement. That being said, a credit union’s successful strategic plan and budget will include planning and providing for appropriate education and training for supervisory committee members, specific to the committee’s duties and responsibilities to the credit union. Finding the right sources for education, conferences, and training starts with finding the right partners. Look for partners that will help your credit union’s supervisory committee stay up with the latest trends and best practices, provide them with industry insights, modern solutions and proven strategies they can use to help their credit union optimize its performance and better prepare to serve its members.

John Dearing is Partner and Managing Director of Capstone Strategic, Inc., one of the leading advisory firms helping credit unions grow through proactive, strategic growth programs. The company has helped numerous credit union and CUSO leaders develop, evaluate, and implement initiatives for building their organizations. John spoke at our Annual Convention a few weeks ago on that topic—“Finding the Best Path for Growth: Strategies for Credit Unions”—and his presentation was so well-received we wanted to offer it to our entire membership as a free webinar, coming up on Thursday, December 7 at 10 AM EST.

We caught up with John this week to get a preview of the topic.

1. The assumption behind your topic – thinking about credit union growth strategies – is that a credit union has a growth mentality. But not all do. When is it appropriate to plan for growth, and when is “steady-state” the optimal path?

You’ve probably heard the expression: “Grow or die.” In my experience, it is very difficult to remain stagnant, and most organizations are either growing or in decline, whether or not they realize it. It’s always important to consider your next step, even when your credit union is in a strong position. If you wait until you are in distress, it may be too late. Far too often leaders find themselves slipping into what we call a “do-nothing strategy,” and unfortunately, falling into business as usual by default is rarely a strategy for long-term growth. That’s not to say you should never stay the course. At times, executing your current strategy may be your best option, but that decision should be made in the context of examining all your options for growth and after careful deliberation.

2. What options for growth should credit unions consider?

We encourage all credit union leaders to examine their five options for growth:

Organic – This is the option most are used to and includes adding new products and services and opening new branches.

Exit – Although it might seem counterintuitive, exiting can allow an organization to refocus on long-term growth.

Minimize costs – Minimizing costs doesn’t mean your solution is the lowest costs. Instead it might mean aggregating for scale with vendors so you can reduce costs on the back-end while still providing a superior service for members.

Do nothing – As I alluded to before, there are times when staying the course can be appropriate, but this option should be carefully considered from a strategic viewpoint.

The important thing is to examine each of the five options in context of the others, so you can make an informed decision about your next steps.

3. Inorganic growth from mergers is not viewed as a positive by some – help us understand the conditions under which it is a win-win outcome. What are the advantages of mergers?

When we speak about mergers and acquisitions (M&A), we are not simply speaking of consolidations between two credit unions. We also mean all forms of growth with an organization outside of your own. This includes joint ventures, collaborations, strategic partnerships, CUSO investments, licensing agreements, etc. When you frame-in from this perspective, this is in fact at the very heart of the credit union movement – collaboration between two entities in order to achieve a win-win outcome that brings value to members. Some of the advantages of external growth are bringing a solution more quickly than you could create on your own, leveraging economies of scale, thinking outside the box, bringing expertise and talent where you need to fill in the gaps. For example, you may partner with a CUSO offering mobile banking if your credit union does not have the expertise in-house.

4. Which asset sizes are seeing the most in terms of merger activity today? Has that trend changed over time?

What you really see over time is the number of credit unions shrinking and there are more, larger credit unions than there were 20 years ago. We just reached a tipping point where there are fewer than 6,000 credit unions in the US. I don’t say this to scare anyone, but simply to keep you informed. The truth is you may not be able to control these market dynamics like consolidation, regulatory pressure, the cost of compliance, etc. What you can control is your own actions. A challenge is simply an opportunity for those who are willing to act.

5. It was great to see more credit unions acquiring banks – is there anything we can do to help that process along?

The number one thing is to get credit unions thinking outside the box when it comes to strategic growth. Buying a bank is simply a creative tactic that credit unions are using to execute their strategic growth plans. What’s most important is for credit unions to continually embrace innovative vehicles for growth like credit union/bank mergers and other forms of external growth. Discussing these topics at the NJCUL Convention and other educational sessions is a step in the right direction so credit union leaders can bring these new ideas back to their organizations.

6. I agree that CUSOs represent a great opportunity – but they also come with risk. Risk of execution, risk of capital, and more. What should a credit union do when assessing CUSO opportunities to minimize risk and maximize reward?

Without taking any risk, how can your organization grow? On the flip side, there is also a risk associated with taking no action – even though you might not see it now, the costs down the road for doing nothing, especially in an industry filled with change, can be disastrous.

Every credit union’s risk profile is different. Some might decide to spread their risk by investing in multiple CUSOs while others might decide to invest in just one CUSO. Others might determine CUSO investment is not the right strategy for them.

Regardless of your risk profile, the best way to minimize risk while maximizing reward is to have a carefully laid out plan that is aligned with your growth strategy for your credit union. A CUSO investment strategy should go hand-in-hand with a credit union’s organic growth efforts and should help the organization accomplish its goals. Using tools to benchmark opportunities against measurable criteria will also help leaders objectively evaluate opportunities and avoid making the mistake of justifying bad opportunities or getting swept away by excitement.

7. When you look at all of these options – how should a credit union organize its thinking about strategic planning for opportunities?

We like to use a tool called the Opportunity Matrix, which is a two-by-two grid: The vertical axis is for products and services, while the horizontal axis is for markets and members. The grid assesses both existing and future demand. There are four quadrants in the opportunity matrix:

1. Consolidation: selling more of the same products to the same market

2. Distribution: selling the same products to new markets

3. Breadth: selling new products to your existing market

4. Diversification: selling new products to new markets

The Opportunity Matrix helps you understand where your credit union stands today and how to position it strategically for future growth.

8. How do you develop criteria specific to the growth strategies of a credit union?

The first place to start is to identify the characteristics of your ideal opportunity and to develop measurable, objective metrics. For example, asset size, number of members served, and specific geographic markets. Next, you should prioritize which of these factors are most important to you because not all criteria are created equally. Think about buying a house – is location or paint color more important to you? The last step is to refine through examples once you begin searching for opportunities.

9. Is this something that only larger credit unions can do?

External growth is not only for large credit unions. Contrary to popular belief, you don’t have to “go big or go home” to successfully grow your credit union through strategic M&A. A small, well-executed acquisition that targets a specific need can sometimes be more powerful than a multi-billion-dollar consolidation. Smaller credit unions can – and have – grown through external growth. A carefully planned, small, strategic deal can exponentially grow your credit union and help you reach your goals. Meaningful transactions are those that help your organization become increasingly focused and effective.

To learn more about strategic growth for credit unions, join NJCUL and John Dearing for a free webinar on December 7. Click here to register.

By:NicolaFoggie, NJCUL Vice President, ComplianceandRegulatoryAffairs

Are you ready for an unexpected event? A large-scale natural disaster like a hurricane, earthquake or flood may lead to hardware failure, network outage or a total shutdown of credit union facilities. Even a small scale event could shut down a credit union for hours and serve to shake member’s confidence in you. Recent natural disasters have illustrated the importance of effective contingency planning to ensure that all credit unions are able to fulfill their missions and obligations to their members during natural disasters or other disruptions in their operations. Effective business continuity planning and disaster recovery practices were discussed Thursday during a free compliance webinar, “Credit Union Disaster Preparedness and Business Continuity”, offered by the New Jersey Credit Union League. Those at a credit union who should be addressing the disaster recovery and business continuity strategy and plan include board directors, senior management, and those responsible for execution. Speaker, Nicola Foggie, VP of Compliance and Regulatory Affairs with NJCUL, provided a high-level overview to effective continuity planning and practices for credit unions, including answering questions and addressing necessary actions like:

Why have a plan?

Objectives of a plan?

Key components of a plan

How to customize your plan

Steps for Recovery

Working through creating and updating plans, as well as ongoing work with the right business continuity and disaster recovery standards can have the side benefit of getting your organization on the path to continued compliance. A well-planned and regularly tested business continuity and disaster recovery strategy often goes way beyond the typical DR plan. Usually put together by an internal team, then put away in a drawer and maybe revisited once a year. Sometimes a plan is not looked at until an actual disaster or significant disruptive event occurs. Only one thing worse than not having a well-thought out Disaster Preparedness & Business Continuity Plan and that’s having an outdated, ineffective one.

Click here to check out NJCUL Business Continuity and Disaster Planning resources and information.

There are plenty of metrics available to define and measure what it means to be the Primary Financial Institution (PFI) for a consumer. For example, you can look at a number of solutions that are proxies for wallet share, like loans, checking, savings, CDs, credit cards, etc., or even volume of dollars transacted for any one of those relationships.

But nothing defines PFI like a mortgage relationship.

It is imprinted on our psyche – go back to Maslow’s Hierarchy of Needs. The most basic needs are physiological – food, water, warmth, rest, which are then followed by security and safety. All of those are arguably related to having someplace to live.

Of course, there is always the option of renting – but homeownership is the proverbial American dream.

If you’re not already offering mortgages, then the strategic question is whether you should be offering members the opportunity for a mortgage relationship with your credit union. I’m willing to bet for those of you that aren’t already offering mortgages, the question is more basic, i.e., how can you offer them, given limited resources and limited deal flow?

It is easy to see how building a mortgage capability can seem daunting, especially to a smaller credit union without high volumes of potential borrowers. But developing a mortgage offering doesn’t always mean that you need to hire staff to handle these mortgages, to ensure compliance and meet complex regulatory and licensing requirements.

Since mortgages are a well-established business process, they readily lend themselves to outsourcing. Which means that a credit union can leverage the work of others and create a robust mortgage solution for their members, with a fraction of the effort, cost and risk to build one from scratch.

Which also means that there are viable options out there for smaller credit unions with low volume of potential mortgage activity.

We’re hosting a one-day workshop on November 7th focused specifically on this question – how a credit union can get into the mortgage business quickly and efficiently, by outsourcing and relying on third-party providers. We’ll cover topics like –

Getting started as an Mortgage Loan MLO (NMLS# Requirements)

Build versus partner versus outsource

What to look for in a contract

Attorney Review considerations and guidelines

Marketing and education

Participation loans

Credit union panel discussion: successful strategies

Whether you are new to first mortgages, have just a toe in the water or want to educate staff, this workshop is for you. This one-day deep dive will feature Lucy Forte from NJCUL Business Partner Symbionce, attorney Peter Liska, and Jeffrey Miller from LoanStreet. And thanks to our sponsors Symbionce and MGIC Mortgage Insurance, the registration fee is just $75.

DETAILS: November 7th from 8:30 AM - 4 PM, at the East Windsor Holiday Inn. For more information and to register, click here.

By:FLEX

Credit union board members are not only responsible for the financial security of their institution, but also the proper safeguarding of member's sensitive information. Proper safeguards ensure a credit union's ability to serve its membership, tasks that are accomplished through the adoption of technology as member behavior changes. The best way to ensure your board of directors understands the importance of technology is to remind them of this responsibility and build the business case to make the decisions easier.

Preston Packer, Director of Sales & Marketing for FLEX, helps credit unions achieve operational efficiencies through the adoption of the FLEX core system offerings. He’ll be presenting on “Maintaining a Common Sense Approach to Core System Reviews” at the League’s Core Processing Workshop on October 11th.

According to FLEX, there are 3 main reasons why your board should consider technology upgrades to be a major priority as you plan for 2018:

1. Cost. Technology is not cheap. The upfront costs of changing and updating core systems can seem insurmountable when looking at the short term. It is important to not be shortsighted, instead look at the costs vs. risks for the future growth and sustainability of your CU. In order to expand product offerings, engage your existing membership and acquire new members, you must be able to pivot and adopt new technologies as they emerge. For example, enhancement of your mobile banking app, internet banking portal, and e-signature capabilities are investments into making your members' lives easier. If you are offering member services that are hitting the mark, you will not only increase member satisfaction, you will also achieve credit union efficiency.

2. Business Case with Key Performance Indicators (KPIs). The business case is intended to convince your board of the merits of an upgrade or core conversion. It is a key part of your project documentation and sets out to explain why the project is necessary. It will take some time to compile, but time that is well worth taking. Therefore, it is crucial to do the research and determine the KPI's your core conversion will look to improve, including:

Return on Assets

Net worth Ratio

Efficiency Ratio

Loan to Share Ratio

Loan Originations

Members per Employee

3. Security. The landscape of business in the 21st century has dramatically changed due to technology. And for every new advancement that makes our lives easier, there are people who want to exploit it. Cybersecurity (protecting your member data) is more important now than ever before. If your credit union technology is outdated, your member data could be at risk. Without properly managing technology, board members and directors often misunderstand their culpability and responsibility to safely chaperon their financial institution into the future. Cybersecurity attacks only need one weakness to exploit your network. Educate your board about protecting your credit union data and how technology upgrades, or investment in updating your credit union core system software may be necessary.

Join the League, FLEX, and other industry experts for an informative and affordable (cost is only $75 per person) Core Processing Workshop on Wednesday, October 11th at the Ramada Plaza Conference Center in Monroe Township to delve into these issues and more.

By: Marissa Anema, NJCUL Vice President, Marketing and Communications

Core processors are aptly named. They are literally the “core” of our business, through which all “processes” take place. It’s arguably the most important piece of equipment/software we invest in.

Whether you are happy with your current core processor, don’t know if you’re happy (there’s always room for improvement, right?), want to explore other options, need an update as your old system is becoming antiquated, are completely fed up with what you have now, or just want to learn how to work better with your existing provider…it’s important to always keep your finger on the pulse of what’s out there.

….that’s not so simple. Assessing your current core, gathering peer reviews of what others are using, putting out RFPs to see what they can offer…these are big, daunting, time-consuming tasks.

But with many conversions taking two years, start to finish, you have to ask yourself…am I willing to stay with what we’ve got for another year, or two, or three? And by then, will it be too late to start the exploratory process from scratch?

That’s where we come in, your League. To help mitigate the time and effort that this process takes, we’ve put together another Core Processing workshop (our first held in March was well-received) titled “Making the Right Decision” taking place on Wednesday, October 11th at the Ramada Plaza Conference Center in Monroe Township.

The sessions will be led by experts in the field. Two—Joe Riccardo of MSS and Amber Harsin of CU Prodigy—worked for credit unions once upon a time, navigated them through core conversions successfully, and now work for core processors themselves. (Side note: Read how Joe considers core conversions “fun” on our blog. Yes, fun!) Two others—Preston Packer of FLEX CU Technology and Joe Grauwels of AMI—have worked for their core processing companies for years, and their main focus is to help CUs achieve operational efficiencies using their technology.

The only thing these folks will be selling you on is the idea that a core conversion isn’t as overwhelming as you think (that’s actually the name of Amber’s session). They will help you establish a common sense approach to core system reviews, show you how to conduct a core conversion readiness assessment, and demonstrate how the right core processor becomes part of your conversion team.

This workshop is meant to be interactive and helpful to all credit unions, no matter where they land in the spectrum of assessing/keeping/updating/dumping their core.

Come get your hands dirty, pose the questions you’ve been dying to ask, and, ultimately, get to a point where you feel more comfortable—and confidant—in the decision-making process.

Click here for more information and to register – as always, our workshops are affordably priced at just $75 per attendee.

B:JoeRiccardo,MemberSupportServices(MSS)President/CEO

In the land of financial institutions, hearing the word “conversion”, one begins to get very nervous. I am sure there have been a fair share of stories around how difficult and stressful they can be and just simply, not fun. Well, I happen to have a different opinion.

Firstly, I always refer to a change in technology as an “upgrade." In this case, a core system technology upgrade.

Secondly, I have found throughout my career in working on system upgrades that they can be fun. Yes, fun! I can still hear the voice of a former colleague as she made a statement to me prior to one of the projects she was leading. She stated, and I quote, “There is nothing like the rush you get in the early morning hours prior to cutting over to the new technology.” Are we different or do we just take a whole different approach to the event? If you guessed the latter, you are correct! We take a whole different approach, and it’s evident in my colleague’s view point. Exciting!

I will not deny the fact that system upgrades are challenging and require a great deal of time, commitment and work, over and above your normal role at the credit union. They are; but, if you are prepared, it can be one of the most enjoyable and rewarding events in your career.

The New Jersey Credit Union League is hosting workshops that give you the opportunity to learn and understand the framework around planning and managing such an event on your own. If a technology change and upgrade is being considered by your credit union, I know you will benefit greatly by attending the upcoming Core Processing Workshop.

Click here to learn more about the Core Processing Workshop: How to Make the Right Decision being held on October 11th at the Ramada Plaza Conference Center. I'll see you there!

By: David Frankil, NJCUL President/CEO

What is the difference between May, 2009 and September, 2017?

In 2009, the markets were plunging, the economy was in crisis, the Corporate system was failing – and credit unions across the country were asked to make "temporary" contributions to stabilize the entire system.

In 2017, the economy is stable and growing (albeit more slowly than desired), there is no systemic crisis in the credit union system – and NCUA is trying to convert those "temporary" contributions into permanent contributions.

This seemingly innocuous change in an obscure operating ratio would allow NCUA to retain a significant percentage of the “temporary” stabilization fees that credit unions paid into the Fund. Although the NCUA estimates that credit unions will receive an NCUSIF distribution (dividend payment) between $600 million and $800 million for 2018, the increased operating ratio would mean that NCUA would retain as much as $1 billion by some estimates. Some New Jersey credit unions have reported that their equity distributions would be reduced by more than 50%.

NCUA is justifying this capital grab under the guise of “risk management.” Currently, NCUA’s process is that the money in excess of the 1.30% equity ratio the regulator uses as its NCUSIF NOL must be paid back to credit unions in the form of a dividend. NCUA is proposing to raise that ratio to 1.39%, to hold back $1 billion dollars in case the original assets of the TCCUSF (which would now be a liability of the NCUSIF due to the merger) do not perform as expected.

On the surface this may seem reasonable, until you look at the Board’s justification for the increase, which is based on the same selective modeling that resulted in billions of excess reserves, unnecessary premiums, and overestimates of losses on legacy assets over the past seven years.

Let’s think about this. Given the restructured corporate system that exists today, much of "yesterday's" risk has been eliminated. If a comparatively larger rebate is made to credit unions and its members by NCUA today, which ends up being premature, the fund can always be recapitalized at a later date. In the interim, absent a crisis, I would suggest that credit unions could do a much better job of managing those assets for themselves than will the regulator.

We can expect that the closure of the TCCUSF will reduce expenses, add sorely needed transparency by simplifying the NCUA’s reporting, and so, in general, it’s a good idea. It should also enable the NCUA to tie financial results of the NCUSIF to real-world credit union events rather than its current practice involving projecting long-term scenarios to justify current expenditures — scenarios that often don’t hold up over time. Credit union members are the ones that send one cent of every insured share to fund the NCUSIF. NCUA is the “steward” for those interests and credit unions have a responsibility to speak up on behalf of their members’ interests.

The current plan to close the TCCUSF is long overdue and the NCUA board should be commended for doing so, but I think the action steps are based on past intricate models that have been shown over the past half dozen years to underestimate the value of the assets taken and overestimate the losses. By closing the TCCUSF and transferring those funds to NCUSIF, the equity ratio of the NCUSIF could be as high as 1.47%.

CUNA and NJCUL have argued the NCUA’s proposed increase in the NOL (to 1.39%) is absolutely unnecessary and are urging the agency to increase no more than 1.34%, temporarily, to offset the risk of underlying legacy assets, if at all. We make it clear that we expect the NCUA to publicly reaffirm the 1.30% NOL as an appropriate upper bound for the NCUSIF’s capital level (given favorable historical performance) and we ask that the agency specifically document plans for the orderly and expeditious return of the NOL from 1.34% to 1.30%.

The challenge to credit unions today is to take action on your and your members’ behalf by responding to the NCUA Board’s request for comments. Merging the TCCUSF and NCUSIF will place a spotlight on NCUA’s management of future corporate resolution transactions and end a stabilization work out that has now gone on for nearly nine years.

Make your voice heard! Click here for NJCUL’s Stabilization Fund Resources, access to PowerComment and a Comment Letter Template. Comments are due by September 5.

By: David Frankil, NJCUL President/CEO

For those of you who may not be familiar, the Federal Home Loan Bank of NY (FHLBNY) is a Government-Sponsored Enterprise (GSE) chartered by Congress in 1932, with a cooperative member-owned structure.They are a low-cost provider of liquidity for their members to lend into their communities. Among their programs to help credit unions achieve their goals is an innovative branch pre-funding program, whichturned out to be a great fit as we were thinking through the content for our Sept 13th "Drive Profit and Improve Engagement at the Branch" workshop.

Our FHLBNY speaker is Adam Goldstein, Senior Vice President/Chief Business Officer, with over 20 years of experience there helping financial institutions accomplish their goals. We caught up with Adam to get a preview of his presentation.

Frankil: As we have talked about your pre-funding program, you’ve started nearly every conversation with an overview of trends in the deposit environment.So let’s start with that here – what is FHLBNY seeing in terms of deposit trends at financial institutions?

Goldstein: We have the largest generation in history now entering the workforce, and these digital natives have an affinity for technology that shapes how they respond to the financial environment. In particular, the key issues we see are -

• Technology, in particular accessibility to various online/mobile platforms and apps are leading to a shift towards new financial institutions such as NeoBanks.

• Financial institutions working with FinTech through acquisitions, strategic partnerships with peer-to-peer lenders, digital money transfer platforms, and other firms are reshaping the business of money.

• Non-traditional competitors entering the playing field, in part to combat low-interest rates and post-financial-crisis regulations that limit trading activity, large investment banks have started competing in the deposit gathering space. This includes the potential for Special Purpose Charters being granted to FinTech companies.

• New Liquidity Regulations for large banking institutions incentivizes them to compete for retail deposits like never before.

Frankil: Help us understand what that means for credit unions.

Goldstein: The deposit gathering environment is evolving, and rather rapidly in some areas. But the basics still hold – focus on evolutionary changes such as multi-channel distribution and other ideas, which I will cover at the workshop. We also surveyed our FHLBNY members to get their perspective on the changing deposit environment, and they outlined a series of strategic initiatives that they’re deploying to compete for core deposits. I’ll be presenting more detailed findings as well.

Frankil: I assume at least some of those strategies involve online and/or direct banking channels?

Goldstein: That’s correct, but it’s really only part of the story.Credit unions focused on their members have significant competitive advantages – if they are leveraged effectively.

Frankil: So what does this evolution mean for branches?

Goldstein: Credit unions should consider viewing their branches through the lens of their primary target audiences. We all know that younger generations prefer technology-based branches – so not just deploying innovative technologies, but partnering with market-leading technology companies to heavily innovate their branches.We’re also seeing the rate of innovation at the ATM proceed at a rapid pace – these innovations will continue to evolve and become a channel in their own right. Technology-based branches also allow credit unions to decrease staff and have a smaller footprint per location, which leads to lower overhead costs over the course of time – this is an important consideration when embarking on technological infrastructure investment.

Frankil: All these innovations sound expensive – let me circle back to the where we started, the FHLBNY branch pre-funding program.How does that work?

Goldstein: FHLBNY member institutions can take advantage of a low-cost advance program that, in essence allows members to obtain wholesale funding at desired deposit projections rather than waiting for the deposits to materialize.By borrowing from the FHLBNY, credit unions can immediately begin investing the money that they plan to acquire with expected new branch deposits. In essence, we are providing liquidity based on a pro forma of expected revenues and return, which reduces the time to break-even versus other more traditional approaches.

We work with members on the process, which includes background research, looking at the historical growth of deposits, and forecasting existing branch deposit growth using a compounded annual growth rate. It is a collaborative process, we even do a “Reality Check” to determine if the new branch growth is obtainable. It is really quite similar to the process any credit union would be walking through to assess potential for a new branch, and we’ll spend some time on how best to do this analysis.

To learn more about how branches are evolving, the strategies your peers are using to capture core deposits, what this means for your branches, and the innovative FHLBNY branch pre-funding program, join us on Wednesday, September 13th at the Renaissance Woodbridge, in Iselin, New Jersey. As always, cost is just $75 per person.

Register for the "Drive Profit and Improve Engagement at the Branch" workshop here.

By: David Frankil, NJCUL President/CEO

How does trust evolve? Or just as important, how does distrust become the norm?

The concept of trust is what makes collaborative efforts and relationships work, whether between credit unions, between credit union leagues, and even nations. Consider how important trust is to the business of financial services – one of the hallmarks of our credit union/member relationship is trust. Also consider how some businesses have found it very easy to build up trust (Uber, Lyft, AirBnB) – and how easy it is to destroy it (Uber, Wells Fargo, VW).

But it sometimes seems as though the environment within which we operate and most of the tools we have at our disposal make it hard to build and maintain trust. It is easy to miscommunicate and create distrust in today’s digital environment. The full nuance of language is never captured in emails, or even worse, with tweets.

All of which suggests that it is worthwhile to spend some time understanding strategies around building trust.

I came across an interesting illustration of the challenge in building trusting relationships, a web site (http://ncase.me/trust/) with a graphical simulation of the application of game theory to various trust scenarios. It starts with the real-world example of the spontaneous World War I Christmas truce, where enemies up and down the line defied direct orders and implemented a cease fire during Christmas, even celebrating with their opposite numbers.

The trust game itself is nominally about two individuals and a coin machine, acting and reacting under different behavioral scenarios – real or expected. You find out which strategies are more effective, and when certain strategies can be less effective – for example, when to turn the other cheek, or treat people like they treat you. Fair warning, it takes about 30 minutes to work through – but trust me, it’s worth it :)

That’s true for the rest of the NJCUL compliance team too – Donna, Sabrina, and Evelyn. But there is a very good reason why we wear the policy wonk label as a badge of honor – it is a core part of the value we provide to NJCUL members, with free use of CUPolicyPro.

Back in March, we hosted an intensive, one-day workshop on Branch Transformation, which was very well-received. The topic almost seems timeless. Despite the focus on online transactions, we’re always looking for ways to better understand how members interact with the branch, and how key physical components need to reinforce the member journey.

Based on the great response to that initial topic, we’ve scheduled another workshop to drill down into two specific challenges we all face – how to drive profit and improve engagement at our branches. As you’ve probably guessed, those two objectives are critically related.

We recently caught up with Sundeep Kapur, who will be presenting at the session, to learn a bit more about the upcoming workshop.

Frankil: We could probably spend an entire week talking about branches and their evolving role in financial services. The first workshop talked about the how – how members interact with the branch, and how the physical environment reinforces their behavior. What will this session focus on?

Kapur: We need to see the branch as an essential component of our brand – we stand out in the community as organizations dedicated to driving financial wellness for our members. Members visit the branch for three primary transactions – they have a deposit/withdrawal, they want to resolve a problem, or they are looking for advice (loans/financial planning/wealth management/other related solutions). Our first workshop outlined journeys around these three key behaviors – now we turn our focus to the tactical, on how credit union executives can map actual member journeys and techniques for shifting member behavior across channels.

Frankil: I know we touched on this briefly at the first session, but what is journey mapping?

Kapur: Simply stated it is how any member transaction should/could flow. Ideally, the journey should be mapped from the members’ perspective. Too many times, journeys are mapped on our stated objectives without looking at the journey from the members’ perspective. Our workshop will focus on how to identify key member needs and blend the journey to map the needs. The focus will be experiential, based on journey mapping conducted at over 100 institutions. Perhaps even more important, we’re bringing lessons drawn from consumer behavior across industries, not just financial services. There are plenty of best practices from outside our financial services world that can and should be adapted to our business model.

Frankil: Let’s make sure we’re using terms in the same way – what does it mean to transform a branch?

Kapur: I know people often think of construction when talking about branch transformation, but I can assure you it doesn’t even require a hammer or a nail. To make improvements – bring people in for advisory services, reduce the cost per transaction, increase the number of products per member – we want to create a dynamic environment where the credit union is looked upon as a place that can mentor members. Transforming the branch also means that we have the right skillsets in place, and are continuing to enhance our capabilities to serve members.

Frankil: Why is journey mapping important to branch transformation?

Kapur: You know the old saying – you can never be too close to your member. Three things to consider – start by knowing what the member wants to do, next align this with the infrastructure we have, and finally look to adjust the journey. Going through this process diligently will give us a clearer path on improvement opportunities. Do this well and you are well on your way to a successful branch transformation experience.

Frankil: If you poll credit union executives, you’d probably find an even split between those that think the branch is essential to growth, and others that are following a more digital strategy. What is the value of a branch in today’s – and tomorrow’s – member experience?

Kapur: PSECU, Ally Bank, and Simple have no branches and a completely digital presence. They can compete effectively because of their digital infrastructure and associated advertising, and national versus local focus. As multi-channel financial institutions focused on our specific constituencies, we have to leverage the branch to build up our brand, serve members with improved ROI, and provide for an effective digital environment. Long-term, we want to embrace an omni-channel approach, which is probably a topic for another day. If I were a credit union investing in the future, the branch still provides a sustainable competitive advantage. This is especially true when you understand the value of advisory services consistent with improving profitability and member engagement – then the challenge becomes changing the transactional mix to provide more advisory services.

Frankil: Is that answer the same for all credit unions, of all sizes and with all fields of membership?

Kapur: One opportunity that transcends what are normally seen as key strategic differences lies in bringing members in for a financial checkup once or twice a year, and staying in touch with them digitally for the duration. We should measure success through enhanced engagement, reduced costs, and improved revenue – a proper mix of omni-channel services. Members should also be able to continue transactions across channel – for example, starting online and completing (not restarting) in the branch, being a primary one to pay attention to. This is one of the many journeys we will be mapping during the workshop.

Frankil: If I am a CEO looking five years over the horizon, how do I assess the value of the branch in the context of my business strategy?

Kapur: Start by looking at the business strategy. If you are delivering on a portfolio of products/services – deposits, loans (small to large), wealth management – you need to consider an enhanced branch interaction strategy. Wealth management and payday loan companies – two complete ends of the spectrum - are continuing to invest in a future branch strategy. We will discuss this during our workshop as well.

Frankil: What kind of data and analytics do I need to make that assessment?

Kapur: Look at five key numbers:

Branch traffic

Transactional mix within the branch

Last member visit to the branch

Last member transactional channel

Number of products per member

We have an opportunity to improve every one of the above with a focus of increasing number of products per member. The correct approach to branch transformation is to leverage this insight to make improvements.

Frankil: Does maximizing the value of the branch always require a transformation?

Kapur: You can achieve so much with simple steps. The first three case studies we are planning to share are based on recommendations that can drive change quickly and inexpensively. Transformation is a journey – we cannot stop while trying to achieve success.

If you want to learn how to apply these and other concepts at your credit union, join us on Wednesday, September 13th at the Renaissance Woodbridge, in Iselin, New Jersey. As always, cost is just $75 per person. Topics will include -

By: David Frankil, NJCUL President/CEO

I don’t know how many of you saw the article in today’s Daily Exchange about the award the NJ CU Foundation’s Reality Fair program received, but I wanted to highlight it – we’re really proud of our accomplishment. Reality Fairs improve financial literacy by providing a hands-on, interactive budgeting exercise modeled on the issues and experiences students will face in the real world.

Our Reality Fair program was recognized by the National Youth Involvement Board (NYIB) for reaching the most students as a team in the less than $150 million category – 2,418 students, to be precise, at a record 18 Reality Fairs held at schools throughout the state this past school year.

Let me repeat that – #1 team program in the entire country in that category!

Kudos to Marissa Anema, NJCUL VP of Marketing and Communications and the Foundation’s Executive Director, for all of her hard work in making this happen.

Thanks are also due to the credit unions that hosted Reality Fairs this school year in New Jersey, for educating the next generation of credit union members, and for having an impact in their local communities –

ABCO FCU

Bay Atlantic FCU

Bridgeton Onized FCU

Credit Union of New Jersey

Hamilton Horizons FCU

Jersey Shore FCU

Members 1st of NJ FCU

Rutgers FCU

South Jersey FCU

Thunderbolt Area FCU

Visions FCU

And let me also express my appreciation for the hard-working Foundation Board, for the volunteers that work the Fairs, and for all those credit unions and other supporters that have contributed financially.None of this would be possible without your support.

Help us break the record again next year – if you’re interested in getting involved, please contact Marissa Anema at manema@njcul.org.

By: David Frankil, NJCUL President/CEO

Most of us consider audits to be a necessary evil, a view which is reinforced by the Cambridge English Dictionary definition of necessary evil as "something unpleasant that must be accepted in order to achieve a particular result."

I think doing your income taxes also falls into that necessary evil category. If you’ve ever seen the Odd Couple, recall Felix Unger, who so enjoyed doing his taxes that he always submitted his return on the first possible day in January. There was an episode where Felix panicked when he was summoned to the IRS, thinking the worst – only to find out they just wanted to meet the person who submitted his taxes so early and organized so neatly, with tabs and color-coded sheets.

For any business, audits are part of a system of checks and balances that –

Confirm the validity and reliability of various kinds of information

Uncover mistakes

Review internal controls

Flag issues for Board and management review

Make recommendations for process improvements

Of course, credit unions also face a host of additional audit requirements set by our regulators that go beyond good business practice.

Well, I’m proud to say that we have our very own Felix Unger at NJCUL – Evelyn Shyposh.

But we’re not talking taxes, it’s for audits – Evelyn loves audits.

Evelyn has over 20 years of experience in financial services, and specifically over 10 years of experience in compliance and internal audit. Evelyn joined NJCUL at the beginning of 2016, as part of our Shared Compliance team.

For those of you that might not be familiar, we rolled out a menu of specific audit solutions for NJCUL members in January, 2017.The value drivers are the same as for our Shared Compliance Program - top-notch people and below-market prices for a mission-critical activity, as a benefit of NJCUL membership.

A sampling of the audits available from NJCUL (really, just the tip of the iceberg):

Bank Secrecy Act Risk Assessment

Enterprise Wide Risk Assessment

Scope of Annual Supervisory Committee Audit

BIA/Risk Assessment

Web site Review

BCP/Disaster Recovery

'Red Flag' - Identity Theft

Data Security Program

Network Review

And more!

As you look to budgeting for 2018, please take a look at our audit solutions – the odds are that we can reduce your costs and still provide great service. Plus you’d make Evelyn’s day!

Something is happening in New Jersey for just the third time in our history - our gubernatorial candidates will have running mates.

Before 2009 New Jersey was one of only a few states that didn’t have a lieutenant governor to succeed to the governorship in the event of a vacancy. Only two individuals had previously held the title, both in the Colonial times.

For most of the state's history, a vacancy in the position of governor was filled by the president of the State Senate.

After episodes where the state had multiple "acting governors" in the span of a few years following the resignations of Governor Christie Whitman in 2001 and Governor Jim McGreevey in 2004, pressure mounted for a better solution to gubernatorial succession. After all, the senate president/acting governor, or “SPAG” as it became known, was inherently a violation of the separation of powers doctrine.

In 2006 a referendum was put before the voters to amend the state's constitution to provide for a lieutenant governor to be elected on a ticket with the governor to serve a concurrent a four-year term. Incumbent lieutenant governor and current GOP gubernatorial nominee Kim Guadagno was elected the state’s first lieutenant governor on a ticket with Governor Chris Christie in 2009, and re-elected with him in 2013.

New Jersey doesn’t have the equivalent of the national conventions where party standard-bearers and their running mates are formally nominated. Here in New Jersey voters select their party’s nominee in a statewide primary election and the nominees select who they want to be their running mate.

So when might New Jersey voters know who’ll be running for lieutenant governor?

The answer rests on two factors; when the primary election results are officially certified, and when the candidates feel they can get the most political bang for their buck.

Officially, a nominee has thirty days to name their running mate once the Division of Elections certifies the primary results. Because that can take about two months, the June 6 primary results might be certified as late as say mid-August. That would leave the potential window for announcing a running mate open until mid-September.

Timing of any announcement is critical, to maximize exposure and momentum. For practical purposes, Labor Day weekend is the traditional start of political campaign season in the state. Unless one of the candidates can do something wildly attention-getting with their pick, it’s going to be hard to get any attention before the end of the summer season. In fact, I’d argue that few other than reporters, pundits and outright political junkies are more than slightly aware there’s even a gubernatorial election this year

I’m betting we won’t know who might be a heartbeat away in New Jersey until after Labor Day. But, in the words of Yogi Berra, “It's tough to make predictions, especially about the future.”

By: David Frankil, NJCUL President/CEO

Last year, our Annual Convention in October came at about the 100-day mark of my tenure here at the New Jersey Credit Union League. The event also represented a golden opportunity to unveil our new strategic focus, and describe how we were going to translate it into concrete initiatives in 2017.

NJCUL is being re-positioned as a true strategic partner, serving as a catalyst for our members' success. Our mission is to help you meet both your immediate needs and longer term goals for growth and productivity.That focus came from you: grounded in direct feedback from more than 130 conversations with CEOs, Board Chairs, volunteers, senior staff, consultants, lawyers, vendors, and many others in the NJCUL value chain.As we’ll discuss in a future blog post, it was also confirmed with our more recent strategic alignment survey, and significantly refined by the NJCUL Board in our strategic planning session.

Our strategy for translating that focus into reality entails:

Providing solutions, information, programs, and relationships that offer compelling value and which are directly relevant to the challenges you face and opportunities you see

Building on the Banking You Can Trust foundation with fresh approaches to building consumer awareness – call it Banking You Can Trust 2.0

We rolled out a new, comprehensive set of initiatives to implement the strategy, touching nearly every aspect of what the League does. Everything we pledged to do on your behalf was well-received at Convention, but there wereattendees who expressed skepticism that we would be able to accomplish it all –the phrase "very ambitious" was uttered more than a few times.Which is accurate – it was (and is) an ambitious agenda.

Nothing makes me happier than proving skeptics wrong– we kept nearly every one of those promises.

We’re now six months into 2017 – call it halftime – and it’s timely to provide a status update on all those new programs (and two bonus additions too):

Phase III – Service – amazing member service stories from long-tenured employees and Board members – kicking off in August

CUJobs4Vets – Statewide initiative to connect veterans in need of jobs to credit unions and business that have them – delayed by technology issues, currently in soft launch phase.

Upgraded CU Reality Check – Thanks to the support of CUNA Mutual Group, we were able to book top-tier speakers at the first-ever Reality Check collaboration between NJCUL and the MD|DC and Pennsylvania Credit Union Associations. Among them:

CUNA Mutual Group Keynote speaker Jeffrey Hayzlett, author of the 2015 Forbes top 10 business book "Think Big, Act Bigger"

Doug Duncan, SVP/Chief Economist at Fannie Mae, and one of Bloomberg Businessweek’s 50 Most Influential People in Real Estate

David Peterson, author of "Grounded Anchor Management for Strategic Leadership and Effective Decision-Making"

A new series of affordable, one-day, hands-on workshops focused on critical operational needs:

NCUA Field of Membership Rules – Jan 17

Branch Transformation – Feb 7

Core Processing I – March 7

HMDA Compliance – May 25

Marketing Workshop – June 21

Core Processing II– Education/Showcase – Fall 2017

Drive Profit and Improve Engagement at the Branch – September 13

All About Mortgages – Getting in the Game – September 19

Cybersecurity – November 2

All About Mortgages – Stepping Up your Game – November 7

Free customized performance reports to enable benchmarking against peers for key performance metrics – distributed each quarter since 4Q 2016.Based on demand, we’re also looking at some training and consulting options to help CEOs and Boards use the reports.

Building the next generation of leaders – successful in obtaining a NJ State training grant in conjunction with Rutgers University that will enable us to provide 48 hours of small group professional managerial development training to over 300 NJCUL member employees, at locations throughout the State. The three, two-day, 16-hour courses are:

Expanded access to NJCUL compliance solutions – In addition to our Shared Compliance program, members can now show an immediate ROI on their dues investment by taking advantage of below-market rates for a variety of audits (BSA, CIP, OFAC, ACH, CAT, Quality Review, Website, and more) and training (BSA, Board Governance, Supervisory Committee Duties and Responsibilities, and more)

Free marketing collateral for small credit unions – free member benefit provided by YourMarketingCo on a quarterly basis

MBL opportunities in energy loans – on hold, awaiting policy decisions from the State

We even added two new programs that we didn’t talk about in October.

A new home improvement loan participation program that enables credit unions to deploy capital and receive a higher return, through an innovative participation program leveraging our partner LendKey’s national network of contractors.

ULEND Academy – developed by CUNA Mutual Group, ULEND Academy is a compressed 2-day version of week-long lending training programs, offered locally on a more cost-effective basis.We will be one of the first three Leagues to offer the program, with our first sessions being held August 22 & 23 at North Jersey FCU and August 24 & 25 at ABCO FCU.

2017 has been a busy year, as you can tell – and I can’t wait to tell you about all the new programs coming in 2018 at this year’s Annual Convention.

Thank you for all of your support, and as always please contact me directly at dfrankil@njcul.org if you have questions, comments, and/or suggestions for new programs and activities that meet member needs.

By: Chris Abeel, Vice President, Corporate & Governmental Affairs

Every so often, a story comes across the wire that just makes you shake your head. In this case, a tale of fraud that is not only easily preventable but would not occur in any state in the nation that has implemented electronic lien and titling (ELT) technology.

Unfortunately, New Jersey is not one of those states.

NJ Attorney General Christopher Porrino recently announced the indictment of five individuals on various first-degree charges for a scheme in which they financed car purchases and then resold the vehicles after fraudulently removing the liens.

The five enterprising individuals, now defendants, apparently purchased or had others purchase vehicles on credit. They then forged letters purporting to be from the lender stating that the loan had been satisfied, and used those letters to get clear titles from the MVC. The vehicles were subsequently flipped for cash, involving at least 25 vehicles over a four-year period “with a total value of well over half a million dollars.”

Who does this hurt the most? Whose pocket did that half a million dollars come out of? The poor consumers who now “own” cars without proper title, and are on the hook for the lien. I doubt the MVC is going to make lenders or unsuspecting consumers whole. And, of course, taxpayers have to pay for the investigation, a trial, and presumably future lodging with the Department of Corrections.

If this doesn’t make the case for ELT, I don’t know what does, and you can bet we’re telling Trenton lawmakers at every turn.

What I find most ironic is that our state regulators are saying all the right things. “This investigation reaffirms the value of motor vehicle documents and the need for the MVC to maintain the security and integrity of its operations,” MVC Chairman and Chief Administrator Raymond Martinez was quoted in the attorney general’s press release announcing the indictments. “Complacency is not an option, which is why we continue to invest in technology, training and internal controls that help us to identify and crack down on criminal activity.”

The current investment in “technology, training and internal controls” allowed this fraud to run for some four years. So may we respectfully suggest implementing ELT, something we began asking for more than five years ago.

ELT can significantly reduce if not eliminate altogether this type of fraud. ELT is a closed looped system, meaning only the lienholder can issue a release through the system, and access is controlled by a user authentication protocol. Is it perfect? No. But it sure is a lot harder to beat than simply cutting and pasting a letterhead!

Apart from fraud prevention, ELT benefits consumers who would no longer have to worry about lost titles, or delays in issuing a title, or getting a lien released. ELT benefits lenders because it helps reduce the cost and time associated with paper liens and titles, including filing, handling, mailing, and, perhaps most cumbersome, going physically to MVC offices with batches of paper forms to be processed.

And, ELT can be outsourced and implemented at no extra cost to the state.

Because the MVC has refused to move forward on an administrative level, we’ve been actively supporting legislation (A1943/S2968) that would mandate ELT and we’re grateful to the sponsors, Senators Joe Vitale (D-19) and Linda Greenstein (D-14), and Assemblymen Craig Coughlin (D-19) and John Wisniewski (D-19), for their support and leadership on this issue.

By: David Frankil, NJCUL President/CEO

Curating content for our Annual Convention (taking place this year October 22-24, at the Golden Nugget in Atlantic City) is exciting, yet challenging. Our audience is diverse – CEOs and other Executives, Board Chairs, Supervisory Committee Members, and Volunteers. Just to complicate things further, the CEOs and Executives range from more senior to those just starting their career – and with functional responsibilities from lending to marketing to operations to HR, and everything in-between.

Factor in the diversity in credit union size and their differing needs, and you can see why crafting great content for Annual Convention takes a concerted effort by our entire team.

Luckily, our team is diverse in their specialty areas (legislative affairs, compliance issues, marketing, member experience, etc.) , so it made sense to take an all-hands-on-deck approach to our initial Convention planning.

At our first “whiteboard” meeting, before we even glanced at speakers and topics, we spent a considerable amount of time talking about our mission at NJCUL – to be a catalyst for our members’ success. As we work through our strategic plan, we’re looking at every activity to make sure it is consistent with that mission – and that applies to Annual Convention, too. Hence the change in theme from the previous two years’ “Inspire” to this year’s “Innovate, Collaborate, Succeed!.”

By:ChrisAbeel, VicePresident, Corporate&GovernmentalAffairs

The Financial CHOICE Act (H.R. 10) and other potential regulatory relief measures have been center stage for most of us in the credit union movement since the new administration took office. But two congressional appropriations issues related to community development funding surfaced requiring our attention, hence the back-to-back alerts.

By: David Frankil, NJCUL President/CEO

We all knew someone like this growing up. They had two paper routes. In the summer, split time between cutting grass for neighbors and manning a lemonade stand right by the bike path. A couple of years later in high school, they learned to do magic tricks, performing at kids’ parties to save money for a car.

Those friends were born salespeople, which sometimes carries a negative connotation, especially from people that have never been in a sales role. The very best salespeople are those that take the time to understand what a prospect needs, and then work like the dickens to meet those needs – or walks away if they can’t. That is the definition of consultative selling, and it is a perfect fit for the credit union ethos.

The Home Mortgage Disclosure Act (HMDA) has undergone several changes, since it was first enacted in 1975. The most recent changes, which went into effect on October 15, 2015, are just the beginning of reporting modifications set to roll out in the coming years.

What are the changes and what does your financial institution need to do to prepare?

By: David Frankil, NJCUL President/CEO

Think about it – there is literally no human activity that occurs without some degree of risk. Walking on the street, riding a bike, driving a car, flying in an airplane, even getting a meal in a restaurant all pose some degree of risk.

The question we face as individuals is the same we face as leaders of financial institutions – how much risk are we willing to accept, and how do we manage it. But to re-state the obvious, without risk, there is no return....

By: David Frankil, NJCUL President/CEO

A recent CU Times article reported on a survey of U.S. millennials that showed they are using third-party solutions like Venmo for mobile payments, instead of a mobile app provided by any individual financial institution. The study of 2,170 U.S. millennials, done by education loan company LendEDU, found that 44% of people born between 1981 and 1997 say PayPal-run Venmo is the mobile payment app they use most often.

I’d describe this as demonstrating that mobile payment apps are evolving into a classic network effect business model.

Earlier this month, it was announced the VantageScore will be rolling out a new formula. The new calculation will be based on borrowing behavior over time instead of a snapshot of credit usage at time of credit pull. Your credit union might be using FICO today, but with this information be widely circulated, which way will the consumer go in attempting to improve their credit score? If they listen to the guidance for the new rules of VantageScore, they could adversely affect their FICO.

Taking risks sometimes might be worth the reward of creating value for your members. Do you believe that risk in your organization manages risk too operationally to adhere to compliance issues rather than the long-term strategic risks? Enterprise Risk Management (ERM) is not a ONE time event and not a ONE SIZE FITS ALL approach. But, where is the balance between taking risks and creating member value? ERM is applicable to ALL areas of the organization, including Human Resources - 5 Reasons HR departments need ERM.

By:BarbaraAgin,NJCULVicePresident,MemberExperience&Education

Live from Hightstown and delivered virtually to FOUR locations, attorney Peter J. Liska, informed attendees on both the legislation and many provisions of the New Jersey Uniform Unclaimed Property Act. Liska reviewed the 10 page operations guide providing examples and fielding questions.

Pictures in addition the attendees at the League (minus {me} photographer ) include our virtual attendees from Atlantic FCU, Members 1st of NJ FCU, Campbell Employees FCU and Rutgers FCU.

By:BarbaraAgin,NJCULVicePresident,MemberExperience&Education

When you look at New Jersey on the map, you would think travel would not be an issue for such a small state. Not so! While Hightstown makes sense as a central location, it isn’t necessarily convenient or conducive for our members given the travel time and/or overall time out of the office.

The League first introduced a video conferencing solution in 2010 with the assistance of two credit unions: Atlantic FCU in Kenilworth and Members 1st of NJ FCU in Vineland. This helped some but still left many unreachable.

By: David Frankil, NJCUL President/CEO

I heard two things consistently from CEOs in my initial round of visits and phone calls back in July.

One was that the League needed to demonstrate a more quantifiable ROI on their dues investment.

The second was the need for cost-effective and local professional development programs. Not that CUNA, CUES, and others don’t offer solid options, but the fees, travel expenses, and total time out of office make it difficult for many of our members to take advantage of them.

It may be eye-opening to assess your morning routine and how those things listed above rank in order of engagement as you crack open your eyes to new day. (If you’re wondering who Alexa, Echo, or Siri is, then we need to talk.)

The point is that our phones have become a HUGE part of our daily lives, and, thus, media consumption has as well. From social media to the news media, with our eyes glued to computer screens at our desks and in our hands (let’s face it, these are not “phones” they are “computers”) we’re consuming hours upon hours of media a day.

By: David Frankil, NJCUL President/CEO

The latest installment of our Banking You Can Trust Legacy Series – which demonstrates the credit union difference by telling the powerful origin stories of our credit unions – is about Central Jersey Police & Fire FCU.

By: David Frankil,NJCULPresident/CEO

Many of you are familiar with ComplySight, the all-in-one Web-based compliance tool offered by NJCUL in partnership with League InfoSight and CUSolutions Group (NJCUL serves on the League InfoSight Board). It provides everything from content, tracking, reports, regulatory alerts, and more— basically everything you need to organize a comprehensive compliance program.

Sundeep Kapur, an expert in digital, branch, and engagement strategies, will be presenting a one-day NJCUL Workshop on Branch Transformation, on Tuesday, February 7. The session is designed for anyone that has ever wondered how they can make their investment in a branch, its people, and all the associated technologies more productive for the credit union, and more valuable to members as well.

By:ChrisAbeel,NJCULVicePresident,CorporateandGovernmentalAffairs

Almost everything we do today—from paying for a cup of coffee to hailing a “cab” to booking a flight or hotel—has gone digital. These processes are quick and simple. No paperwork, no paper receipts—or statements even.

By:NicolaFoggie,NJCULVicePresident,ComplianceandRegulatoryAffairs

Yesterday, the NCUA and credit unions won a huge victory! U.S. District Court Judge James Cacheris dismissed a lawsuit brought by the Independent Community Bankers of America (ICBA) against the National Credit Union Administration (NCUA), this past September. The Banker’s suit against the agency challenged NCUA’s 2016 member business lending rule (MBL). The American Bankers Association supported the ICBA litigation that challenged the MBL rule and amendments that changed the statutory MBL cap, including making it easier to exclude nonmember loans from the cap calculation. According to the court’s opinion, the lawsuit was dismissed based on ICBA’s lack of standing and timeliness. In his opinion, Judge Cacheris stated that even if the ICBA had established standing and timeliness, the court said it still would have found that the rules satisfied the requirements established by the Administrative Procedures Act and existing case law.

By: David Frankil, NJCUL President/CEO

You may have seen an article in the Daily Exchange yesterday about XCEL CEO Linda McFadden’s upcoming live appearance on 101.5 FM, January 31st at 8:00 AM, as part of our new Leaders Series. I wanted to provide more background on how this fits with our other brand awareness initiatives, unveiled formally at the NJCUL Annual Convention last year.

If you recall, revamping our brand awareness campaign is a priority 2017 strategic initiative for the League. We started with the Legacy Series, which uses the power of story-telling and unique credit union origin stories to show how credit unions are different from banks. It has been very successful, with pick-up by local media outlets and broad exposure via social media.

The Leaders Series shares the same objective of highlighting the credit union difference, but with a twist. It is focused on showing how our leadership—CEOs of credit unions—truly cares about the financial well-being of their members by offering financial advice to consumers. This accentuates the contrast with how bank CEOs see their customers, as a source of profit.

Sundeep Kapur, digital and consumer engagement strategist, will be presenting a one-day NJCUL Workshop on Branch Transformation, on Tuesday, February 7. The session is designed for anyone that has ever wondered how they can make their investment in a branch, its people, and all the associated technologies more productive for the credit union, and more valuable to members as well.

Sundeep Kapur, digital and consumer engagement strategist, will be presenting a one-day NJCUL Workshop on Branch Transformation, on Tuesday, February 7. The session is designed for anyone that has ever wondered how they can make their investment in a branch, its people, and all the associated technologies more productive for the credit union, and more valuable to members as well.

This is the first of a two-part interview with Sundeep, where he discusses with NJCUL President/CEO David Frankil the potential gains from thinking about your branch in a different way.

By:DavidFrankil,NJCULPresident/CEO

As a kid, the Jetsons were my favorite cartoon. There was just something about how easily futuristic technologies were magically integrated into daily life without any issues in Orbit City. George Jetson even walked their dog Astro on a treadmill without the inconvenient detail of dealing with what always occurs when you walk your dog. That clearly only works in cartoons.

Financial services has also become a mix of the traditional and the cutting edge, as disruptive, game-changing innovations are developed and make their way into our business. Except we don’t have that luxury of glossing over all the challenges of integration.

By:DavidFrankil,NJCULPresident/CEO

When I ask CEOs what they want from the League, the most frequent response has been “more”—more content, more training, more relevance, more value. Which is exactly where we want to take the League, re-positioning it as a true strategic partner, helping members grow and be more productive.

As part of this process, we’ve created a new series of one-day workshops focused on critical credit union operational issues. The name “workshop” was chosen deliberately—these are not symposia, or discussion groups, or academic seminars. They are workshops—come spend a day, roll up your sleeves, and dig into the nitty-gritty of a topic and walk away with valuable, actionable information.

By:DavidFrankil,NJCULPresident/CEO

The conclusion of nearly every article about the benefits of credit union membership is that you can join a credit union, and you should do it as soon as possible.

I’m telling you the same thing about the low-income designation (LID) from NCUA—if you meet the criteria, you should work through the process as soon as you can. A federal credit union qualifies for LID when a majority of its membership (50% + one member) qualifies as low-income. It’s as simple as that.

By:DavidFrankil,NJCULPresident/CEO

Setting the right price for a product or service is a challenge for any business. Set prices too low, and you negatively impact margins and starve the business of capital – in the extreme, fixed and variable costs might not be covered. Set prices too high, and sales suffer and the business itself might be threatened.

Discuss prices with your competitors, and you might become a long-term guest at a Federal institution not of your own choosing.

Understanding price elasticity of demand – the relationship between price and quantity – is a challenge that many large companies spend millions of dollars trying to understand.

For credit unions, there is an added component that comes with the financial services territory – risk. The risk that a member might default on a loan plays (or should play) a role in determining the interest rate that borrower should pay, which is just as important as understanding the true cost of capital in making pricing decisions.

By:AndyJaeger,NJCULChairmanandCUNJPresident/CEO

It is no surprise that the last few years have been challenging for the League, between the turnover at the top to the impact of an ever-so-slowly improving economy and persistent low-rate environment on New Jersey credit unions.

By:DavidFrankil,NJCULPresident/CEO

Smaller credit unions face many challenges in marketing their products and services effectively, but the most basic is developing professional collateral material to promote solutions…without spending a fortune. A crisp, clean look and feel is critical to communicating the value of our solutions, and that doesn’t come with bargain-basement design efforts.

To help jump-start the process for small credit unions without the hefty price tag, Bo McDonald, CEO of Your Marketing Company (one of our partners), has stepped up to provide high-quality, professional promotional pieces that small NJCUL member credit unions can use completely free of charge—or with a modest fee for customization. The first in the series is an eye-catching promotion of holiday loans (see graphic below).

By:DavidFrankil,NJCULPresident/CEO

Our Annual Meeting and Convention took place this week in Atlantic City, and it was very successful, due to the outstanding efforts of the entire team here at NJCUL, specifically including Yvette Segarra – who I am never going to let retire; she just adds too much value. Please give her and the rest of the team a virtual round of applause.

This year was a bit different than prior years, in part because of my presentation on Monday morning. It dispensed with the usual formalities and got right down to business.

The focus was the first 100 days, and the over 100 conversations I’ve had with member and non-member CEOs, Board members, senior executives, our team, and vendors as well. The goal: to assess whether our internal perception of value matched up with what our target audience (you) needed.

By:DavidFrankil,NJCULPresident/CEO

Last week we published a Legacy Series blog post on United Poles FCU highlighting how they were founded by thirteen members of the local Polish community to help recent immigrants and residents overcome language and other barriers impeding access to basic financial services. That fits perfectly with the goal of the Legacy Series, communicating how credit unions are different than banks by telling origin stories.

The idea for the blog post came from a meeting with Iwona Karpeta, their CEO, who told us how United Poles FCU was founded.But it wasn’t the only interesting idea to come from the meeting.

Iwona talked about how important children’s accounts were to their overall growth and engagement strategies. Children’s accounts are not exactly a new concept in banking, but what struck me was the way Iwona talked about leveraging them to reach Millennials as an overt part of their engagement and growth strategy.

Saving is a strong part of the Polish cultural heritage, and United Poles FCU leverages that to reach younger generations. It is typical to see accounts established when a child is born and children being encouraged to save from their earliest days.Families bring kids into the credit union where they get to know the tellers and other executives, make deposits – and get lollipops and other treats, too. By the time they grow up, they are a part of the family, and the credit union is their natural choice of financial institution.

By:DavidFrankil,NJCULPresident/CEO

I’m guessing that every generation has had some sort of conversation about the younger generation that goes a little something like this: We don’t understand them or their behaviors, what motivates them, how to manage them, or how to market to them.

You know, all those old sayings like…

Kids, you can talk and talk till your face is blueKids, but they still just do what they want to doWhy can’t they be like we were, perfect in every wayWhat’s the matter with kids today?

By:DavidFrankil,NJCULPresident/CEO

I’ve written about how we are transforming the League for 2017 to be more valuable and relevant. But what does that really mean?

This week we made the first in what will be a series of announcements that offer up examples of steps the League is taking towards this transformation.

Peer group benchmarking is a great management tool to highlight opportunities, whether for productivity improvements, greater leverage, and/or for growth. You all have the ability to access your own Call Report data – what is harder is to see how you compare with your peer groups on key performance parameters for growth and productivity.

With enough time and enough resources you could do the analysis yourself – after all, Call Report data is available on the NCUA website. But who has the time to identify who should be in your peer group, download their Call Report data, crunch the numbers, and analyze the results?

To me, this is exactly what a League focused on value and relevance should be doing for its members.

By:DavidFrankil,NJCULPresident/CEO

That would be “Before CFPB.”

And odds are that your credit union was also born in the BC era.

Few new financial services regulatory agencies have had the fast start and wide-ranging impact of the Consumer Financial Protection Bureau (CFPB). For anyone charged with tracking and complying with their rules, the last five years probably seem like dog years.

This all came to mind this week with the Wells Fargo debacle, and the role that the CFPB played in bringing those practices to light and to an end. The CFPB vision and values statements provide the foundation upon which they acted – but what is most interesting is how consistent they are with what you’d see at a credit union:

By:DavidFrankil,NJCULPresident/CEO

I recently sent a note to the entire membership with a preview of some of our 2017 initiatives, noting that they were developed from conversations with over 60 CEOs, and were part of our philosophy of market-led growth.

The process is actually more strategic than just having a good chat with a CEO. The question we’re answering is how to ensure that the value you’re providing actually matches up with what the market needs.

Let me use a case study with a gaping value gap from a consulting engagement I finished just before joining NJCUL to illustrate the approach we’ve taken with the League.

The client was a midsize general contractor (~$10M in revenue) offering integrated architectural design and construction services, focused primarily on office buildings, warehouses, and distribution centers. They wanted to know why they weren’t growing faster, especially when they saw new competitors winning jobs they thought should be theirs.

They thought the problem was a bad salesperson – but the engagement quickly evolved into a more extensive assessment of their fundamental value drivers.

We used an active listening process I call a “Marketing MRI,” and it has two components – internal and external. The first step is to interview employees at all levels of the company to understand their perception of key value drivers and what they see as the issues impeding growth.